Major Supplementary Budget and The Challenge for Fiscal Management

 In 2021, the House of Representatives passed the supplementary budget for fiscal 2021 on December 15, with the general account expenditure of about 36 trillion yen. And the House of Councillors also passed it on December 20. The supplementary budget was compiled in response to the Cabinet's decision on November 19 to implement the “Economic Measures for Overcoming COVID-19 and Opening Up a New Era”, entailed a record fiscal expenditure of 55.7 trillion yen, of which 31.6 trillion yen was appropriated in the supplementary budget as expenditures in the national general account.

 The expenditure of the fiscal 2021 general account will be swollen by this supplementary budget to 142.6 trillion yen, second largest to the 175.7 trillion yen recorded in fiscal 2020, which was boosted by a series of measures to deal with the coronavirus pandemic. On the other hand, revenue increased only by a total of about 14 trillion yen, including the increase in tax revenues and a surplus in the settlement of the fiscal 2020 budget. As a result, the supplementary budget deficit has swelled to 65.7 trillion yen, up 22.1 trillion yen from the initial budget. Most of this deficit will be covered by the issuance of government bonds, meaning that the burden will have to be borne by the later generations.

 In general, supplementary budgets in Japan have been used to date for recovery from disasters or as the measures to stimulate the economy. But some experts say they are loopholes for fiscal management and administration, because they are not subject to ceilings of the expenditures. When drawing up the supplementary budget, it is necessary to consider thoroughly the necessity and the urgency of compiling the each of the expenses.

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