Japan’s ruling party executive calls for $ 290 billion stimulus package

Japanese Minister of State for Local Economy Vitalization Kozo Yamamoto speaks in Tokyo, Japan on August 3, 2016. REUTERS / Kim Kyung-Hoon

  • Government Should Issue More Bonds To Fund Stimulus Package – Yamamoto
  • BOJ can aggressively buy bonds to fund a program – Yamamoto
  • Japan may need to raise capital gains tax, but not now
  • Japan must move quickly to digital yen issuance – Yamamoto
  • BOJ Law Must Be Overhauled, Add Job Growth To Mandate – Yamamoto

TOKYO, Oct. 14 (Reuters) – Japan must develop an economic stimulus package worth at least 32-33 trillion yen ($ 282-290 billion) to cushion the impact of the coronavirus pandemic a senior ruling party official close to Prime Minister Fumio Kishida said on Thursday.

Such large-scale spending would be needed to close Japan’s output gap and meet the central bank’s 2% inflation target, said Kozo Yamamoto, architect of the former “Abenomics” stimulus policies. Prime Minister Shinzo Abe.

“The package can be financed through the issuance of Japanese government bonds (JGB),” said Yamamoto, now Kishida’s economic policy associate. “The government is expected to issue a massive amount of long-term JGBs, which can be aggressively purchased by the central bank.”

A former head of the finance ministry, Yamamoto was deeply involved in the creation of the Abenomics, a mix of massive monetary and fiscal stimulus and a growth strategy rolled out in 2013 to pull Japan out of economic stagnation.

Kishida said he would maintain Abenomics stimulus policies and take additional steps to distribute wealth more widely to households. The Prime Minister also pledged to compile a spending program worth “several tens of billions of yen.”

“What is important above all is to achieve strong economic growth with the three arrows of the Abenomics. Only then can we talk about redistribution,” said Yamamoto, who added that he frequently exchanged emails with Kishida.

While Japan may need to raise taxes on capital gains and dividends to close the income gap, it will take at least until fiscal 2023 to present the details, Yamamoto said.

Yamamoto, who has spearheaded the party’s financial affairs proposals, reiterated that Japan must act quickly to issue a central bank digital currency (CBDC).

This would require revising the law governing the Bank of Japan (BOJ), which would create an opportunity for other changes such as adding job creation to the central bank’s mandate, he said.

“We need to hold the BOJ responsible for both price stability and job creation,” Yamamoto said.

Right now, the BOJ defines pricing and financial stability as its mandate, but not job growth.

($ 1 = 113.5,300 yen)

Reporting by Leika Kihara and Takaya Yamaguchi. Editing by Gerry Doyle

Our Standards: The Thomson Reuters Trust Principles.

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