Saunas and fruit sandwich stores explode with subsidies…Do you know how the dubbed “16 trillion yen of national funds” is being spent?
Green Innovation Fund” created by former PM Kan at the drop of a hat totals 2 trillion yen
The balance of the “fund” accumulated by the government has reached a staggering amount. As of the end of FY2010, the total amount is approximately 16.6 trillion yen.
Why has the balance of the fund grown so large? If such a large amount of money is sitting unused, why not apply it to the “extraordinary measures to combat the declining birthrate” that the government has been so keen to implement? What is the purpose of the national fund, anyway?
Professor Takero Doi of Keio University’s Faculty of Economics, who is also a member of the Administrative Reform Promotion Council and the Council on Fiscal Institutions, explains as follows.
The funds are created for use in multi-year projects such as economic measures, and are set up by independent administrative corporations, public-interest corporations, and other affiliated organizations that are separate from the ministries and agencies.
In principle, the national budget is to be used up within the fiscal year. For example, it is not allowed to carry over tax revenues collected in 2009 and use them until 2011. So what if you want to spend it in ’23?’ You take the taxes collected in ’21 and disburse them to an outside organization that places a fund in the fund, and then you can pretend that the funds were disbursed by the government within the ’21 fiscal year.
If you place the fund in an external organization, no matter when that organization spends from the fund, it does not have to go through the deliberations of the Diet. In extreme cases, the funds can be stashed away for years and can be used whenever they want.
As of the end of FY 2010, there were 186 funds established by 13 ministries and agencies. According to national rules, the end of the fund must be specified within a period not to exceed 10 years, but about 30% of the funds are undecided.
The current fund structure was first used in the aftermath of the Lehman Shock. The amount of the fund was smaller than now, but it was in the order of hundreds of millions.
After the COVID-19 crisis, as economic measures were repeatedly implemented with a focus on scale, trillions of yen were set aside in supplementary budgets, and huge funds were established one after another. Although funds are supposed to be included in the initial budget, in reality, most of them are included in supplementary budgets with lax assessments.
Among the 186funds, there are some funds related to the TPP (Trans-Pacific Partnership) measures of the Ministry of Agriculture, Forestry, and Fisheries (MAFF), but they amount to a few tens of billions of yen at most. The largest is the METI fund, such as the “Green Innovation Fund” established in FY 2008 by former Prime Minister Suga Yoshihide, which has a total value of 2 trillion yen to encourage investment in decarbonization. The number of such funds with large amounts of money has increased to COVID-19 crisis.
The budget for the fund was several hundred billion yen to 1 trillion yen before FY19, but it jumped to 11.5 trillion yen in FY20 as a result of the COVID-19 crisis economic countermeasure projects. In FY2010, the amount reached 10.6 trillion yen.
As a result, the fund balance, which was approximately 2.4 trillion yen at the end of FY19, was approximately 8.3 trillion yen at the end of FY20 and approximately 12.9 trillion yen at the end of FY21. By the end of FY 2010, the balance had reached approximately 16.6 trillion yen.
