Japan¡¯s debt-strapped government unveiled a budgeting mechanism to try to minimize the financial burden of new green and other growth initiatives by tying funding to cost-cutting results at its ministries.
Under the plan, ministries get ?3 to spend on projects in targeted areas including the environment and digitalization for every yen they¡¯re able to cut from other spending, according to documents released by the Cabinet Office Wednesday.
The plan calls for cuts of 10% to discretionary spending, which totaled ?14.9 trillion ($135 billion) last year across the country¡¯s ministries. Cuts to non-discretionary spending are also part of the plan.
Prime Minister Yoshihide Suga is pushing for investment into green and digital technologies even as the government struggles under the developed world¡¯s heaviest debt burden. The new budgeting mechanism is an attempt to square that circle by providing incentives for Japan¡¯s bureaucrats to cut costs while also funding the country¡¯s new growth projects.
Like many countries, Japan has adopted new targets for reducing greenhouse gases, aiming for net-zero emissions by 2050. Analysts are skeptical the goal will be met, but the new budgeting incentives could at least help. The government has also allocated a ?2 trillion fund to green projects.
Investing in more software and computers to do the government¡¯s work has also become a national mission after the pandemic exposed how slow the bureaucracy sometimes moves. Website problems slowed the delivery of stimulus money to residents last year and Japan¡¯s vaccine rollout has been hindered by backward computer systems, especially at the local government level.
Using cost-cuts to pay for needed investments may not be easy because the Japanese government is already so lean. Public sector employment is one measure of that. Fewer than 6% of Japanese workers are employed by government, far below the 18% average of peer countries in the Organization for Economic Cooperation and Development.

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