Tokyo, July 21 (QNA) - The Japanese government approved Tuesday its first economic and fiscal policy guidelines, prioritizing aggressive fiscal spending in strategic areas to boost the economy but with no clear mention of fiscal consolidation.
The policy blueprint states the government will treat the next fiscal year from April as "the first year of responsible and proactive" spending and target a combined 370 trillion yen ($2.3 trillion) in public and private sector investment by fiscal 2040. The longer-term guidance is aimed at boosting predictability for businesses.
The plan represents a shift from the previous fiscal approach that focused on austerity and reducing spending, as the document emphasizes that boosting investment in the future is a priority to drive economic growth.
To secure the necessary funding, from fiscal 2027 onward, the state budget will have a newly created investment allotment for creating a "strong and prosperous Japan," under which ministries can make budget requests without upper limits.
The requests will be assessed in the budget-making process based on factors such as whether they will contribute to growth by generating investment returns.
In the guidelines, the government set the target of securing sustained real growth of more than 1% and nominal growth of over 3% "as early as possible," though they are seen as ambitious.
According to the Cabinet Office, Japan's inflation-adjusted growth rate averaged 0.4% between fiscal 2021 and fiscal 2025. (QNA)