OPINION: Japan must sustain market confidence, tighten fiscal discipline

TOKYO - In the government's annual guidelines for economic and fiscal management approved by the Cabinet on July 21, what caught my attention was a shift toward budget planning based on strengthening growth and expanding the economy, as well as changes to fiscal consolidation targets. On budgeting, it is reasonable to try to restore supplementary budgets, often used to fund stimulus packages launched almost every year, to their original purpose by limiting them to items with high urgency and importance, rather than using them as a convenient way to ratchet up policy spending.

For 17 strategic areas the government prioritizes, such as artificial intelligence and semiconductors, budgets will be allocated based on multiyear public-private investment plans to make spending trends easier to anticipate. But the investment areas are wide-ranging and there will be no cap on budget requests, meaning the government must scrutinize how funds are used to avoid indiscriminate spending or excessive expansion. On fiscal soundness, the traditional approach was two-tiered: with the primary balance in deficit, first secure a surplus, then steadily reduce the ratio of debt to gross domestic product.