politics

Japanese finance minister cautions against changes to debt redemption rule

5 Comments
By Tetsushi Kajimoto

Japanese Finance Minister Shunichi Suzuki cautioned against making any change to the government's debt redemption rule as it helps the government maintain fiscal discipline.

Suzuki made the comments after a cabinet meeting on Friday, as some ruling Liberal Democratic Party (LDP) lawmakers are calling for extending a 60-year redemption period to allow more debt issuance and bigger spending.

Whether to review the rule is being debated by an LDP panel led by the party policy research chief Koichi Hagiuda, tasked with seeking sources of funding for a controversial plan to boost defense spending.

The 60-year redemption rule is applicable to redeeming construction bonds and deficit-covering bonds so that these bonds, including refunding bonds, will be entirely redeemed in a 60-year period.

"This 60-year redemption rule is set from the standpoint of securing sources of funding for redemption of JGBs and leveling fiscal burdens of redemption. In a sense, discipline is being kept with this rule."

"In Japan, the 60-year redemption rule is one way to secure fiscal discipline. We must think thoroughly about how the loss of this rule would be perceived," he said, referring to rules adopted by other countries.

The amount of overall government bond issuance would not change even if the 60-year debt redemption rule is reviewed, Suzuki told reporters.

© Thomson Reuters 2023.

©2023 GPlusMedia Inc.

5 Comments
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 extending a 60-year redemption period to allow more debt issuance and bigger spending.

Finally bigger spending and more spending, like current one is not enough.

-2 ( +4 / -6 )

a controversial plan to boost defense spending.

You mean double defense spending.

In the end they’ll stick it to the middle class.

0 ( +4 / -4 )

Japanese Finance Minister Shunichi Suzuki cautioned against making any change to the government's debt redemption rule as it helps the government maintain fiscal discipline.

"Fiscal discipline"? Laughing my rear off. What "Fiscal discipline"???

We already cranked up VAT to 10pct to "insure sustainability of health care and pensions" while regularly both are being downgraded.

Since begin January this year is the LDP barking about a plan to "deal with the low births problematic", plan which involves a lot of spending which some LDP-pundits are already saying could be financed by...increasing VAT...(other are estimating a future VAT at 14pct...)

A much easier way to deal with all the necessary public spending would be to cut all pet projects, ego-trip, megalomaniac nonsense, vote-grabbing fluff, etc that represents both the LDP's core "business" and the sole way it has to remain in power but that is not likely to happen any time soon...

-3 ( +3 / -6 )

"In Japan, the 60-year redemption rule is one way to secure fiscal discipline. 

 

 Ah ah ah. He made my day. It better to laugh than to cry I guess. Otherwise life becomes really hopeless!

-4 ( +1 / -5 )

seeking sources of funding

Public spending’s primary revenue source is public taxation, now or later so one need not search hard. Secondary sources of revenue don’t amount to much and may as well be ignored.

Redirecting existing spending towards new priorities would be the sensible thing to do.

"In Japan, the 60-year redemption rule is one way to secure fiscal discipline. We must think thoroughly about how the loss of this rule would be perceived,"

My perception is that it is ineffectual. 60 years is a long time, and when you have accumulated a quadrillion yen of public debt, and long term interest rates are looking to rise, whilst your central bank prints trillions of yen and buys up most of the newly issued JGBs on the same day they are issued, it frankly looks like Weimar Germany rather than a government of fiscal discipline.

I think another “way” to ensure fiscal discipline would be to charge politicians 20,000,000 yen per year when they spend beyond tax revenues. If they stay within tax revenues, give them the 20,000,000 plus a 30,000,000 yen bonus. I would bet then the government would demonstrate a lot of fiscal discipline. Performance pay.

-1 ( +1 / -2 )

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