Japan’s Vice Econ Minister Says No New Bonds for Stimulus

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.”

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza