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Policy Proposals  Economic Policy, Social Security Proposal for Formulating Fiscal Consolidation Plan - Restoration of Fiscal Health Cannot Be Achieved without Economic Recovery and Social Security Reform -

May 19, 2015


Departure from deflation and economic recovery as well as fiscal consolidation are pressing issues. In addition, concerning fiscal consolidation, institutional reforms aimed at restraining further growth of social security-related costs that have increased notably over the past 25 years are unavoidable.

As targets for fiscal consolidation, the goal of turning the primary balance into a surplus by fiscal 2020 should be firmly maintained. The ratio of outstanding government debt to GDP should be a complementary index for the time being, and it should be stably reduced after achieving a surplus in the primary balance.

The period between fiscal 2016 and fiscal 2018 will be designated as an intensive reform period in which economic recovery and expenditure reforms should be tackled with utmost priority, with the setting of numerical targets. An interim assessment should be conducted in fiscal 2018, and in the event the targets are not met, additional expenditure and revenue reforms should be decided. In doing so, the necessity of additional measures for revenue reform, including raising the consumption tax rate, should be studied. They should be embodied by fiscal 2020 to achieve a surplus in the primary balance.

Toward economic recovery, the government needs to firmly commit itself to the task of realizing Japan's revitalization strategy as well as implement without any delay additional measures to enhance growth, realize economic growth of over 3% in nominal terms and over 2% in real terms, and work on increasing revenue.

As for social security reform, increases in benefit expenses should be contained within the scope of the rise in the benefit expenses associated with the increase in the number of elderly people. Measures such as promoting the use of generic medicine, raising the self-pay rates for healthcare services for the elderly and nursing care, and reducing the payment of basic pension benefits for high income earners should be implemented. Also, taking into account the decline in the population, an increase should not be a premise in expenditures other than social security, and they should be streamlined without sanctuary instead.

Economic Policy, Social Security