Prime Minister of Japan and His Cabinet  
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Statement by Prime Minister Shinzo Abe on the Basic Principles of the FY2007 Budget Formulation (Cabinet Decision) in Response to the Report by the Council on Economic and Fiscal Policy (CEFP)

December 1, 2006



The Abe Cabinet today agreed on the Basic Principles of the FY2007 Budget Formulation based on the report by the Council on Economic and Fiscal Policy (CEFP).

The FY2007 budget is the first to be compiled by the Abe Cabinet, befitting the formation of a "Cabinet for the creation of a beautiful country"-a country filled with vitality, opportunity and compassion, which cherishes a spirit of self-discipline, and is open to the world.

Under the principle that Japan can have no future without growth, it is imperative that we improve the growth potential of the Japanese economy through the power of innovation and openness and work toward advancing such growth.

I will comprehensively promote measures in the FY2007 budget to construct an open economy full of vitality by strengthening Japan's international competitiveness, vitalizing local regions, building a human resource-oriented nation and supporting people's efforts to "challenge again."

I will also promote measures to construct a social security system that is easy to understand as well as compassionate and reliable, build a child-raising friendly society, respond to the risks of life, and realize an environment in which people can enjoy a high quality of life, with the aim of realizing a healthy and safe society.

Administrative and financial reforms are inseparable from economic growth. I will unflinchingly work on the integral reform of expenditure and revenue in accordance with the Basic Policies 2006 to restore the fiscal health of the nation. In line with this, responsible new steps will be taken in the FY2007 budget. Expenditure will be reduced systematically during the next five years, while maintaining economic growth and placing top priority on minimizing the financial burden on taxpayers. Under these measures, I will thus definitely achieve a surplus in the primary balance of the central and local governments in FY2011.

The FY2007 budget will cap the issuance of new government bonds at a level far below that of the current fiscal year in a firm effort to make clear the Cabinet's strict and strong determination to restore fiscal health. This will necessitate a thorough reduction and review of expenditure. In FY2007, the first fiscal year of a five-year expenditure reform, I will review the existing systems and measures for social security services, public investment and local government finance, and I will also reform the taxation and budget systems.

I will steadily promote fundamental administrative reform, including a reduction in the cost of civil servants, based on the Administrative Reform Promotion Law.

The Abe Cabinet will work as one to draw up a FY2007 budget that will support the policies of a "Cabinet for the creation of a beautiful country."