Japanese Vice Economy Minister Yasutoshi Nishimura said on Wednesday that the government would not issue new bonds to fund an expected economic stimulus package, due to concern about massive public debt.
The economic package for the fiscal year to March would be aimed at supporting low-income households, small firms and rural areas hit hard by higher energy and materials costs caused by the yen’s depreciation, Nishimura told Reuters in an interview.
He did not describe the size of the package but suggested it would be smaller than the previous stimulus spending worth 5.5 trillion yen ($48 billion) centering on public works projects.
“Even if the sales tax is raised again as planned, Japan would be more than 10 trillion yen short of its primary-budget balance target in 2020. There’s no room for fresh bond issuance to deploy stimulus,” he said.
“The yen has weakened this much and it’s probably a plus for the Japanese economy on the whole. But the negative effects are large as well on small firms and rural areas, so we see the need to take steps to respond to those areas.”