The Japanese government is preparing a new basic policy on economic and fiscal management that would anchor growth to over 370 trillion yen in planned public-private investments and abandon rigid single-year primary balance targets, according to a draft outline presented to the Council on Economic and Fiscal Policy on 26 June. The document, to be compiled in July, proposes a new crisis management and growth investment quota and instructs ministries to fund recurring measures through initial budgets rather than relying on large supplementary packages. Prime Minister Sanae Takaichi told the council that total spending must be calibrated to reinforce the economy’s growth potential and expand its nominal size, while the draft calls for placing the steady reduction of the central and local government debt-to-GDP ratio at the centre of fiscal goals.

The Fiscal System Council, an advisory panel to the finance minister, submitted separate proposals the same day that acknowledged Japan’s exit from deflation and its shift from demand shortfalls to supply constraints. The panel stressed that fiscal discipline must be maintained despite the reform of the budget process, and it warned that optimism about growth and interest rates, combined with a lack of medium- to long-term perspectives, could undermine market confidence in government finances. The council also urged alleviating the social security burden on working generations and requested a roadmap to raise the out-of-pocket medical payment rate for people aged 70 or older to 30 percent, matching the rate for working-age adults.

Domestic political and institutional pressures are accumulating around the prime minister. A criminal complaint filed on 3 June by Hiroshi Kamiwaki, a professor at Kobe Gakuin University, accuses Takaichi and a secretary of violating the political funds control law by recording 2.1 million yen in corporate donations that the complainant alleges were actually payments for tickets to fundraising parties. Separately, the Mainichi Shimbun reported on 27 June that the state-backed Cool Japan Fund, created in 2013 to promote Japanese culture abroad, is facing a review and possible merger after accumulating losses of nearly $334 million. A senior government official quoted by the newspaper said of the fund, “Cool Japan is finished. Even if you merge weak organisations, they remain weak.” The fund’s underperforming investments include the now-defunct Anime Consortium Japan streaming platform and the WakuWaku Japan pay-TV channel.

Amid these domestic strains, Takaichi is scheduled to travel to New Delhi from 1 to 3 July for the 16th India-Japan Annual Summit with Prime Minister Narendra Modi, the Indian Ministry of External Affairs confirmed. The visit, originally considered for Guwahati but limited to the capital because of time constraints, follows the 2025 Tokyo summit that set a 10 trillion yen private investment target and adopted a joint vision for the next decade across eight pillars including economic security, technology, and human resource exchanges. The basic policy is expected to be finalised in July, while the criminal complaint remains under review by public prosecutors and the Cool Japan Fund’s restructuring plans are yet to be formally announced.