Japan finance chief calls for early budget passage in quake aftermath

TOKYO (Kyodo) — Finance Minister Shunichi Suzuki on Tuesday called for swift passage of a fiscal 2024 budget to help Japan overcome recent inflation through more robust pay hikes and extend “full” support to areas hit by a deadly earthquake on New Year’s Day.

The 112.57 trillion yen ($763 billion) budget, revised after the magnitude-7.6 quake devastated the Noto Peninsula in central Japan, is necessary to tackle a spate of issues that should not be postponed any longer as Japan is “at a historic turning point” in achieving sustainable growth, Suzuki told parliament.

The government has doubled the amount of emergency funds in the budget to 1 trillion yen to spend on relief and reconstruction work in a “seamless and flexible manner,” he said.

The overall budget shrank from the previous year’s record 114.38 trillion yen but is still the second-largest, posing a challenge for heavily indebted Japan to restore its fiscal health, the worst among advanced economies.

In his speech on fiscal policy, Suzuki acknowledged that the country’s finances are “all the more severe,” but the government maintains the view that economic growth should come before fiscal rehabilitation.

“We will further normalize our spending toward the goal of achieving a surplus in the primary budget balance in fiscal 2025,” he said.

The primary balance — tax revenues minus spending, except for debt-servicing costs — is an indicator of fiscal health. Based on the government’s most recent estimate, however, Japan will likely miss the target.

The state budget for the next fiscal year from April includes a record 7.95 trillion yen for defense, part of a five-year plan through fiscal 2027 to boost Japan’s defense budget to 43 trillion yen. The government is also boosting its child-care support, in its desperate effort to reverse the nation’s dwindling birth rate.

“The choices we make now will open up the future. Taking on the pressing challenges that should be addressed right now, we must rebuild the economy, tackle fiscal rehabilitation and pass on a society filled with hope to the next generation,” Suzuki said.

In a separate speech in parliament, economic revitalization minister Yoshitaka Shindo said Japan has a “big chance” of attaining both income and economic growth in a virtuous cycle.

“Whether Japan can seize this opportunity will determine the course of the economy over the next decade,” he said, expecting the economy to grow 1.3 percent in real terms and 3.0 percent in nominal terms in fiscal 2024.