Asia > Eastern Asia > Japan > Japan policymakers soften fiscal pledges as election prospects loom

Japan: Japan policymakers soften fiscal pledges as election prospects loom

2017/09/23

Senior Japanese policymakers on Friday said they may need to adjust calculations underlying the country's plans to trim spending, an indication the government could look to water down previous pledges to improve fiscal prudence.

The statements are a nod to recent reports premier Shinzo Abe will delay the timing for conference fiscal reform goals to allow the scope to boost spending on education.

Finance Minister Taro Aso said no decision has been made from presently on by the government on whether to delay its goal of achieving a primary budget surplus in fiscal 2020.

But he added the ministry would need to do fresh calculations to see whether the target can be met if part of revenues from a planned sales tax hike in 2019 are used on education and child care.

"We originally decided to allocate revenues from the tax hike mainly on social security. If the ratio (for other spending) rises, we need new calculations on whether the primary balance target can be completed by fiscal 2020," he said.

"Our broader stance is to aim for both fiscal consolidation and economic revival. Therefore, we will make considerations based on this stance," he told a briefing.

Economy Minister Toshimitsu Motegi as well told reporters on Friday that while cost-cutting efforts were necessary, the government would be flexible in reviewing the fiscal target.

"There's no change to our stance of doing our utmost to cut spending toward year-end ... But we'd like to scrutinise what the fiscal target should look like" toward a mid-term review of Japan's fiscal policy scheduled next year, he said.

The remarks contrast with their before comments repeating that Japan will stick to its fiscal consolidation target to ensure it does not lose market trust over its finances.

The government has vowed to turn Japan's budget balance to a surplus in the fiscal year ending in March 2021, as a crucial step to rein in the world's heaviest public deficit burden at twice the size of Japan's economy.

But government sources have told Reuters Abe is set to delay the timing for achieving the target to divert additional revenues from a scheduled sales tax hike in 2019 on education, ahead of a snap election he is expected to call in October.

Abe will unveil the decision on Monday at a news conference at which is he expected to formally announce his plan to call a snap election, the sources said.

Aso as well said he had no plan to issue deficit-covering bonds to fund the cost of education someday, an idea floated by some ruling party lawmakers.

A primary budget balance, which excludes new bond sales and deficit servicing costs, is a key gauge of measuring how spending on policy measures is financed without relying on deficit.

Related Articles
  • Carmakers face billions in European CO2 fines from 2021

    2017/09/23 Large-name carmakers inclunding Volkswagen and Fiat Chrysler face fines running into the billions for failure to meet tough new European carbon dioxide emissions limits slated for 2021, a study has found. "Only four out of 11 carmakers are estimate to meet the EU 2021 CO2 emission target, with the rest facing significant fines," researchers from British firm PA Consulting said in a statement Friday. European Union nations agreed in 2014 that carmakers should limit CO2 emissions to 95 grammes per kilometre across their entire model range within seven years.
  • UNWTO: International tourism – strongest half-year results since 2010

    2017/09/09 Destinations worldwide welcomed 598 million international tourists in the initial six months of 2017, some 36 million additional than in the same period of 2016. At 6%, increase was well above the trend of recent years, making the current January-June period the strongest half-year since 2010. Visitor numbers reported by destinations around the world reflect strong request for international travel in the initial half of 2017, according to the new UNWTO World Tourism Barometer. Worldwide, international tourist arrivals (overnight visitors) increased by 6% compared to the same six-month period last year, well above the sustained and consistent trend of 4% or higher increase since 2010. This represents the strongest half-year in seven years.
  • There’s no doubt we lost our mojo - our way as an engineering company that made Honda Honda

    2017/09/08 The driver punched the air as his red and white Honda McLaren roared over the finish line. It was Suzuka, Japan, 1988, and Ayrton Senna had just become Formula One world champion for the initial time. The McLaren racing team and its engine maker, Honda Motor, were unstoppable that year, their drivers winning all but one of the 16 grand prix races. Off the track Honda had been tasting success, too. In the 1970s, its engineers had raised the bar for fuel efficiency and cleaner emissions with the CVCC engine. In the 1980s, as its engines were propelling Senna to multiple victories, the Civic and Accord cars were redefining the American family sedan. In 1997, Honda became one of the initial carmakers to unveil an all-electric battery car, the EV Plus, capable of conference California’s zero emission requirement.
  • Why Japanese workers aren’t as concerned about robots stealing their jobs

    2017/08/21 A culture that celebrates robots and a tradition of "lifetime employment" — retaining and retraining workers — created a muted debate. Thousands upon thousands of cans are filled with beer, capped and washed, wrapped into six-packs and boxed at dizzying speeds — 1,500 a minute, to be exact — on humming conveyor belts that zip and wind in a sprawling factory near Tokyo. Nary a soul is in sight in this picture-perfect image of Japanese automation.
  • Taro Kono starts well as Japan's foreign minister

    2017/08/15 Foreign Minister Taro Kono made his presence felt on his initial overseas trip since taking the position last week. In fluent English, Kono exchanged opinions with other foreign ministers and distinguished himself on several occasions, inclunding with an off-the-cuff counterargument to Chinese Foreign Minister Wang Yi. Although Kono has made a solid start, however, the diplomatic arena contains a lot of pending issues — and producing good results will not be easy.