The government approved at a cabinet meeting on Aug. 2 a budget request ceiling for FY17 exceeding 100 trillion yen for three years in a row. Since an upper limit has not been set for expenditures, the Finance Ministry will be cutting down requests for allocation during its evaluation process late this year. A key question is whether the increase in social security spending, including pension and nursing care, which takes up one-third of government expenditures, can be curtailed.
The government’s goal is to limit the increase in social security expenditures to 500 billion yen each year. Under the FY17 ceiling, if efforts are not made to reduce spending, the social security budget is estimated to increase by around 640 billion yen from the previous year. In order to achieve its goal, the government will have to cut around 140 billion yen, such as by reducing medical expenses.
On the other hand, the ministries are asked to reduce public work expenditures and other policy spending, where discretionary increases or decreases will be possible, by 10% from the FY16 budget (14.8 trillion yen). A decision was also made to set aside a special budget of 4 trillion yen for projects to realize a society for dynamic engagement of all citizens.