The Takaichi administration approved the Basic Policy on Economic and Fiscal Management and Reform and Japan Growth Strategy at a Cabinet meeting. The growth strategy rests on two pillars, crisis-management investment and growth investment, while the fiscal plan sets out a medium- to long-term framework. Future challenges, including regional revitalization and policies concerning foreign nationals, have also been identified.
On 21 July, the Takaichi administration approved the Basic Policy on Economic and Fiscal Management and Reform and Japan Growth Strategy at a Cabinet meeting, setting out a policy of strengthening supply capacity and earning power through strategic public- and private-sector investment, and linking increased tax revenue from growth to fiscal sustainability. Securing market confidence in the effectiveness of fiscal discipline has been identified as a challenge, while specific policy directions have also been presented in areas including policies concerning foreign nationals, regional revitalization, and disaster prevention. In monetary policy, the administration has also shown consideration for the Bank of Japan’s independence.
The growth strategy sets out a policy of strengthening Japan’s autonomy and indispensability, centered on two pillars: crisis-management investment and growth investment. At the same time, the broad scope of the targeted sectors, the need to improve the operating framework, and the concentration of resource allocation have been identified as future challenges, creating a need for a framework that operates through the PDCA cycle. How to stimulate private investment is another important issue. Progress on regulatory reform will also be key.
In fiscal policy, multi-year budget management will be introduced through the Medium- to Long-Term Economic and Fiscal Plan for fiscal years 2027–2040, with the aim of strengthening fiscal discipline. However, the lack of clearly stated numerical targets and deadlines is seen as a challenge, and a clearer path toward fiscal consolidation is needed. Investment in growth sectors will not be subject to a budget ceiling, and initial budget requests have reached a record high of approximately ¥143 trillion.