A subcommittee of the Fiscal System Council launched full-fledged discussions Thursday to compile the budget for fiscal 2020.
The budget compilation work for the coming fiscal year, which starts in April, is the first of its kind since the Reiwa Era began May 1 with the Imperial succession.
Budget requests by government ministries and agencies totaled a record ¥105 trillion, while economic measures following the consumption tax hike to 10 percent from 8 percent Tuesday are expected to be discussed separately.
The focal point of discussions at the subcommittee, which advises the finance minister, is whether it can draw up concrete recommendations to curb ballooning social security costs.
At a subcommittee meeting Thursday, Finance Minister Taro Aso said his ministry hopes to draw up a high-quality budget suited for the new era, including through full spending reform, to strike a balance between economic revitalization and fiscal reconstruction.
The government aims to steer the primary budget balance of central and local governments into the black in fiscal 2025. But, the Cabinet Office estimates that the primary budget balance will remain in the red in fiscal 2025 even if the country continues to achieve high economic growth on the basis of the tax hike.
At Thursday’s meeting, the Finance Ministry submitted documents illustrating this estimate and stressed the difficulty of fiscal reform.
In September, the government launched a panel for debates mainly on pension and medical system reform to create a social security system that benefits all generations.
It is uncertain whether the panel can hammer out initiatives to curb the surge in social security costs stemming from the rapidly graying population.
The Fiscal System Council will discuss budgets for specific subjects, such as social security and the agriculture, forestry and fisheries sector.
It plans to compile a set of proposals as early as late November in hopes that they will be reflected in the government’s draft budget to be drawn up late in the year.