Policy Statement by Taro Aso, Minister of Finance and Minister of State for Financial Services, at the Committee on Financial Affairs of the House of Councillors
October 14, 2014
I am Taro Aso, Minister of Finance and Minister of State for Financial Services.
For starting this meeting of the Committee, I will make a brief address.
(The current situations of Japanese economy and basic fiscal policy)
The second Abe Cabinet has been seeking to end the prolonged deflation as soon as possible and revitalize the Japanese economy by strongly promoting an integrated “three arrows” strategy comprised of the “Aggressive Monetary Policy,” “Flexible Fiscal Policy,” and “Growth Strategy for Promoting Investment,” and those measures are clearly seeing an effect. The Japanese economy is on a moderate recovery, while weakness can be seen in some areas. In addition, more companies have decided on increasing wages, which hadn’t been seen in recent years.
To ensure that such movements lead to sustainable economic growth, we must steadily implement the Growth Strategy to link the improvement in corporate earnings to an increase in incomes through higher wages and dividends, and an increase in employment. It is also important to further expand and achieve a “Virtuous Economic Cycle” whereby an increase in consumption generates further investment, which in turn leads to an increase in corporate earnings.
(Measures for achieving sustainable economic growth and fiscal consolidation)
To realize sustainable growth led by private demand, it is essential for us to steadily proceed with fiscal consolidation in order to ensure the confidence in government bonds and to prevent the realization of the risk of rapid increase in long-term interest rate. It is also important to reduce concern among households and enterprises about public finances, and to boost up private consumption and investment.
To this end, we will continue to work both on the expenditure and revenue sides in order to achieve the fiscal consolidation target, which aims to halve the primary deficit of the national and local governments to GDP ratio by FY2015 from the ratio in FY2010, to achieve a primary surplus by FY2020, and to steadily reduce the public debt to GDP ratio.
(Summary of the FY2015 Budget)
The FY2015 Budget is designed to firmly achieve the goal of fiscal consolidation for FY2015. We must endeavor to realize economic growth led by the private-sector demand, as well as to take measures for overcoming population decline and regenerating the regions. Therefore, every area of expenditures, including social security, should be reevaluated, and we should make the content of the budget even more focused and efficient.
A raise in the consumption tax rate is aimed to maintain Japan’s credibility, and to pass down a social security system to the next generation in order to enhance our support for children and childrearing. We will appropriately make the decision by the end of this year whether to raise the consumption tax rate from 8 percent to 10 percent, taking into account the economic conditions and other factors in a comprehensive manner.
(Basic concepts on the future of financial administration)
Next, I would like to make a few remarks on the current financial administration.
To strongly promote measures to end the deflationary stagnation and achieve sustainable economic growth, it is also critical for both direct finance and indirect finance to play appropriate roles as financial intermediaries so that funds are supplied smoothly throughout Japan, particularly in the local economies.
To this end, we will encourage financial institutions to provide finance based on evaluation of customers business potentials, and to cooperate with other stakeholders to actively improve the performance of the customer’s businesses.
Also, based on Japan Revitalization Strategy, which was updated this June, we will implement measures such as promoting the use of NISA, assisting financial infrastructure development in Asia, and drafting the Corporate Governance Code, with the mind to establish a virtuous cycle in which more than 1,600 trillion yen household assets are allocated to funding for growing businesses, to realize Asia’s potential growth in tandem with Japan’s growth, and to promote entrepreneurship and strengthen the competitiveness of companies.
That aside, Japan’s financial system as a whole is sound and stable at present, and we will, with strong interest, keep a close watch over the impact of domestic and foreign economic and market developments on Japan’s financial system.
(Bills to be submitted to the extraordinary Diet session)
We will ask you to deliberate on bills related to the Ministry of Finance, the Bill to Partially Amend the Act on Temporary Measures concerning Customs and the Bill on the Provision etc. of Information concerning Goods requiring Declaration pursuant to the Japan-Australia Economic Partnership Agreement.
We will explain the details of those bills later, so I hereby ask you to deliberate on this matter and give your approval.
I am determined to continue, with your support, to do my best in policy management.
I would appreciate the understanding and cooperation of Chairman Furukawa and all the other members of the Committee.
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