Statement by Prime Minister Junichiro Koizumi
[Regarding Economic and Fiscal Management for the Time Being]
November 22, 2002
In light of increasing uncertainty in the financial and economic situation, the Government recently compiled the "Comprehensive Measures to Accelerate Reforms." After that, the pace of movements towards an incipient economic recovery has become more gradual and the short-term economic conditions are increasingly uncertain. Moreover, we will outline a general direction towards the resolution of the non-performing loan problem based on the "Program for Financial Revival." With regard to the impact on the economy in that process, it is essential to ensure that all necessary measures are taken.
In this situation, given factors such as prospects of tax revenue for FY2002, it is apparent that there is a need to formulate a supplementary budget. Seizing this opportunity, I have decided to make further policy enhancements to our approach to structural reform in response to the current fiscal and economic situation. I will implement bold measures to supplement and strengthen the "Comprehensive Measures" compiled as a means to enhance policy towards achieving economic revival in Japan. To that end, I have decided to newly compile a "Program to Accelerate Reforms" and necessary budget shall be secured in the FY2002 supplementary budget.
The measures to be incorporated in the "Program to Accelerate Reforms" shall be those which supplement and strengthen the "Comprehensive Measures to Accelerate Reforms" and which will be either required for urgent implantation together with the acceleration of structural reform, or deemed to contribute directly to curbing deflation. Specifically, the Program will include measures to expand the safety nets for employment and small and medium enterprises, and measures matching the four new priority areas stipulated within the "Basic Policies for Economic and Fiscal Policy Management and Structural Reform 2002" and careful selection will be made to identify 1) measures deemed to have a particularly great effect in stimulating private sector demand and creating employment, as well as 2) measures that can be implemented promptly with a high immediate economic impact and whose urgent implementation are deemed necessary.
The supplementary budget to be formulated based on the "Program to Accelerate Reforms" will provide budgetary allocations in the national expenditure of 1.5 trillion yen for the creation of the safety nets to prepare for economic and social structural transformation and 1.5 trillion yen to promote public investments that will advance structural reform.
With a view to maintaining fiscal discipline, in formulating the supplementary budget, the issuance of additional government bonds will be restricted as much as possible and we will adhere to the goal of ensuring that, in real terms, the FY2003 budget is kept to within the levels of FY2002 in terms of general expenditures and general account expenditures. Moreover, we will firmly maintain the goal of ensuring a surplus in the primary balance early in the 2010s, as outlined in "Structural Reform and Medium-Term Economic and Fiscal Perspectives."
In addition to the above, regarding the scale of the advanced implementation of tax cuts in the FY2003 tax revision, although until now these have been stipulated being "the deepest tax cuts possible in excess of 1 trillion yen," with a view towards economic revitalization, in cooperation between the Government and the ruling parties, there is a need to make efforts towards ensuring that these are achieved on an even greater scale. In particular, in order to advance reform to make a shift from savings to investments, reform of the tax system will be implemented including creation of a financial and securities tax system that can be easily understood by the people. Among the tax cuts to be brought forward, in principle, retroactive application to January 1, 2003 will be made for the revision of the research and development promotion tax system and the investment promotion tax system as well as inheritance tax and gift tax. Examination will be made towards submission of a single legislative package bill to the next ordinary session of the Diet for implementing overall tax system reform, including advanced implementation of the tax cuts under the framework of revenue-neutral tax policy over multiple fiscal years.
Furthermore, the Government will boldly promote revitalization of businesses and industries in order to advance industrial and financial policies in an integrated manner, in conjunction with the acceleration of the disposal of non-performing loans held by financial institutions. Specifically, we have established the "Strategic Headquarters for Industrial Revival and Employment Measures," with I myself as chief. Furthermore, I have appointed Sadakazu Tanigaki as Minister of State for Special Missions in order to create the Industrial Revitalization Corporation (provisional name). The necessary bills for that purpose and a comprehensive reform bill for the Law on Special Measures for Industrial Revitalization are to be submitted to the next ordinary session of the Diet.
Reference: The four new priority areas identified in the "Basic Policies 2002" are as follows
1) Expand growth frontiers - science and technology, education, and IT
2) Build attractive cities and create local communities with their own characteristics
3) Take necessary measures to build a fair and secure society despite the aging society and declining birthrate
4) Construct an environment-friendly society and economy to deal with global environmental problems
Back to Index