Photo/Illutration The Ministry of Economy, Trade and Industry (Asahi Shimbun file photo)

Government-related funds that received allocations from national budgets had accumulated more than 20 trillion yen ($128 billion) in unused money by the end of fiscal 2023, a Board of Audit of Japan report showed.

In some cases, the unspent money should have been returned to the government, but it was not, according to the report released on Dec. 24.

The board called on the government to review the scale of its budget allocations to prevent such overfunding.

The Constitution stipulates that government budgets must be fully used within the fiscal year, in principle.

But when projects span several years, and the required amount for each fiscal year cannot be accurately estimated, the government can provide lump-sum allocations to funds managed by government-affiliated organizations.

Essentially, these funds can pool government budgetary resources for specific projects.

Lawmakers have long criticized what they say is government overspending on these funds and wasting taxpayers’ money during Diet sessions.

After receiving a request from the Diet in June 2024, the board examined funds that were established by the central government’s 14 ministries and agencies and were operated by government-affiliated organizations and prefectural governments.

It found that the government allocated a total of 33.2451 trillion yen to 114 funds managed by government-affiliated organizations and other entities over five years from fiscal 2019 to 2023.

During the same period, 34 funds operated by prefectural governments received 1.4428 trillion yen.

By fiscal year, the government allocated 928.9 billion yen to the funds in 2019, and 9.2755 trillion yen in 2020, a 10-fold increase from the previous year.

Since fiscal 2020, the size of allocations has significantly increased for projects tackling the COVID-19 pandemic and rising prices.

From 2021 to 2023, annual allocations ranged between 5 trillion yen and 13 trillion yen.

As of the end of fiscal 2023, 254 funds, including those that received money before fiscal 2019, had a combined surplus of 20.4157 trillion yen.

Broken down, the balance was 18.7969 trillion yen across 191 funds operated by government-affiliated organizations and other entities, 7.9 times higher than the surplus at the end of fiscal 2019.

Unspent money totaled 1.6188 trillion yen for 63 prefectural funds at the end of fiscal 2023.

The board found that at 36 funds, the actual costs of their projects were 25 percent or less than the estimated amounts in fiscal 2023.

Funds set up by the Ministry of Economy, Trade and Industry held 13.4019 trillion yen in unused money, accounting for 65 percent of the total among ministries and agencies.

Six METI funds, including the Green Innovation Fund Projects aimed at achieving a decarbonized society, each had a balance exceeding 1 trillion yen.

METI was the only ministry with funds holding more than 1 trillion yen in unspent money.

The Regulation of Execution of Budget Pertaining to Subsidies Law stipulates that excess funds must be returned to the national treasury, depending on project conditions.

In addition, the government’s Administrative Reform Promotion Council has urged ministries and agencies to base additional budget allocations on past performances and specific demand.

However, four funds received additional allocations without sufficient consideration of their past conditions or demand, according to the board’s report.

The Board of Audit also identified four funds that should have considered returning the unused money to the treasury but did not bother.

The board has asked the funds to consider the necessity of returning those funds.

Once the funds secure resources, spending on their projects does not require Diet deliberations.

In the supplementary budget passed in December, Prime Minister Sanae Takaichi’s administration has allocated a total of 2.5 trillion yen for 41 funds.

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