Japanese Government Approves 2015 Budget Guidelines

Prime Minister Shinzo Abe’s Cabinet on Friday approved the guideline for the compilation of the fiscal 2015 budget, vowing to bolster Japan’s economy and restore its fiscal health — the worst among major industrialized countries.

An estimate released earlier in the day, however, showed Japan is unlikely to meet its international commitment to achieving a government budget surplus by fiscal 2020, even if it goes ahead with the 2-percentage-point consumption tax hike to 10 percent next year.

Ministries and agencies will make budget requests by the end of August based on the guideline, toward compilation of the fiscal 2015 budget later this year.

The guideline states the government will set aside up to 4 trillion yen to promote its new growth strategy aimed at boosting the corporate sector and local economies, while eying a 10 percent cut in discretionary policy spending, such as for public works projects.

Social security outlay requests were allowed to increase by 830 billion yen in line with the graying population, but the government promised to strictly review costs weighing on public finances.

Mandatory spending requests including personnel costs in the year starting April 2015 remained unchanged at 12.4 trillion yen.

The budget request guideline did not set a cap on total spending as a final decision has yet to be made on whether to raise the consumption tax rate from the current 8 percent to 10 percent as scheduled from October 2015.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza