Japan Press Weekly

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2016 January 27 - February 2 [ECONOMY]

Abe gov’t seeks free hand to issue bonds in order to finance anti-people budget

The Abe administration has introduced to the current session of the Diet a bill to allow the government to freely issue deficit-covering bonds for an additional five years. The bill will undermine the parliamentary authority to check the government’s budgeting and fiscal discipline.

The Finance Law prohibits the government from issuing bonds except for purposes of financing public works projects. This prohibition was established based on Japan’s past history when the Imperial Japanese government issued a large amount of bonds to cover ever-growing military budgets during WWII which was disastrous to government finance and people’s livelihoods.

Until 2011, as a minimum measure to maintain fiscal discipline, the government was required to have a special temporary law enacted every year it issued deficit-covering bonds.

The current special public bonds law was passed in 2012, backed by the Democratic, Liberal Democratic, and Komei parties. It entitles the government to issue deficit-financing bonds without gaining Diet approval from fiscal year 2012 and 2015.

The new bill, which the government recently submitted to the Diet, will enable the government to receive the same special treatment until FY 2020 from the coming fiscal year.

The special public bonds law is closely linked to the government budgeting process. In the 2016 draft budget, the amount of the defense budget exceeded five trillion yen for the first time ever. In addition, the government proposed to increase the budget for public works projects and offer preferential treatments, such as a decrease in corporate tax rates, to wealthy individuals and large businesses. It is unforgivable for the government to seek a free hand in issuing deficit bonds in order to cover such an anti-people budget.

Past related article:
> Special public bonds law will distort fiscal discipline [November 18 & 20, 2012]