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The Budget Process

Despite the increasingly apparent limits of bureaucratic power, the Budget Bureau of the Ministry of Finance is at the heart of the political process because it drows up the national budget each year. This responsibility makes it the ultimate focus of interest groups and of other ministries that competed for limited funds. The budgetary process generally begins soon after the start of a new fiscal year on April 1. Ministries and government agencies prepare budget requests in consultation with the Policy Research Council. In the fall of each year, Budget Bureau examiners reviews these requests in great detail, while top Ministry of Finance officials work out the general contours of the new budget and the distribution of tax revenues. During the winter, after the release of the ministry's draft budget, campaigning by individual Diet members for their constituents and different ministries for revisions and supplementary allocations becomes intense. The coalition leaders and Ministry of Finance officials consult on a final draft budget, which is generally passed by the Diet in late winter.

In broad outline, the process reveals a basic characteristic of Japanese political dynamics: that despite the oft-stated ideals of "harmony" and "consensus," interests, including bureaucratic interests, are in strong competition for resources. Political leaders and Budget Bureau officials need great skill to reach mutually acceptable compromises. The image of "Japan Incorporated," in which harmony and unanimity are virtually automatic, belie the reality of intense rivalry. The late-twentieth-century system is successful insofar as superior political skills and appreciation of common interests minimize antagonisms and maintain an acceptable balance of power among groups. It is unclear, however, whether this system will continue as Japan faces such problems as growing social inequality, an aging society, and the challenge of "internationalization" of its society and economy.

Data as of January 1994