Will fiscal consolidation be a priority for ruling party's new leader?
Japan looks poised to put even less emphasis on fiscal consolidation under the new leader of the ruling Liberal Democratic Party when the successor to Prime Minister Yoshihide Suga forms a new government.
Most candidates for the Sept. 29 party leadership race have pledged large-scale economic measures ahead of the start of campaigning on Friday as they bid to address the coronavirus crisis and return growth to the pandemic-hit economy.
Each is playing up a bold economic package ahead of a general election that must be held by Nov. 28.
The winner will replace Suga, who announced his intention to resign earlier in the month, as prime minister given the party controls the powerful lower house of parliament. The next leader will be tasked with attending to Japan’s fiscal health, which is the worst among major developed countries.
The world’s third-largest economy is saddled with public debt of more than ¥1,200 trillion ($10 trillion), or over 200% of its annual gross domestic product, as of the end of March.
Among three main contenders, former communications minister Sanae Takaichi appears more likely to be proactive on fiscal spending than former Foreign Minister Fumio Kishida and vaccination minister Taro Kono, analysts say.
“The three contenders can distinguish themselves by launching their own fiscal policy and growth strategy, and Ms. Takaichi’s fiscal policy looks most expansionary and (under which) it would be easy to increase budget deficits,” said Yoshimasa Maruyama, chief economist at SMBC Nikko Securities.
Takaichi, who seeks to be the first female prime minister in Japan, said the government’s goal of putting its primary balance into the black by fiscal 2025 should be shelved until the Bank of Japan achieves its 2% inflation target.
The primary balance — tax revenue minus spending other than debt-servicing — is regarded as an important fiscal soundness indicator.
According to the initial budget for the current fiscal year through March 2022, Japan’s primary deficit has more than doubled to ¥20.36 trillion from the amount in the previous year’s initial plan, due to a decrease in tax revenue and increase in expenditure under the pandemic.
Takaichi said at a news conference last week that her economic plan is a remodeled version of former Prime Minister Shinzo Abe’s economics program, dubbed “Abenomics,” which consists of “three arrows” of monetary easing, agile fiscal spending to deal with the pandemic and other possible emergencies, boosting investment in crisis management, and economic growth.
Under what she calls “Sanaenomics,” Takaichi plans to spend around ¥100 trillion over 10 years.
Japan looks poised to put even less emphasis on fiscal consolidation under the new leader of the ruling Liberal Democratic Party when the successor to Prime Minister Yoshihide Suga forms a new government.
Most candidates for the Sept. 29 party leadership race have pledged large-scale economic measures ahead of the start of campaigning on Friday as they bid to address the coronavirus crisis and return growth to the pandemic-hit economy.
Each is playing up a bold economic package ahead of a general election that must be held by Nov. 28.
The winner will replace Suga, who announced his intention to resign earlier in the month, as prime minister given the party controls the powerful lower house of parliament. The next leader will be tasked with attending to Japan’s fiscal health, which is the worst among major developed countries.
The world’s third-largest economy is saddled with public debt of more than ¥1,200 trillion ($10 trillion), or over 200% of its annual gross domestic product, as of the end of March.
Among three main contenders, former communications minister Sanae Takaichi appears more likely to be proactive on fiscal spending than former Foreign Minister Fumio Kishida and vaccination minister Taro Kono, analysts say.
“The three contenders can distinguish themselves by launching their own fiscal policy and growth strategy, and Ms. Takaichi’s fiscal policy looks most expansionary and (under which) it would be easy to increase budget deficits,” said Yoshimasa Maruyama, chief economist at SMBC Nikko Securities.
Takaichi, who seeks to be the first female prime minister in Japan, said the government’s goal of putting its primary balance into the black by fiscal 2025 should be shelved until the Bank of Japan achieves its 2% inflation target.
The primary balance — tax revenue minus spending other than debt-servicing — is regarded as an important fiscal soundness indicator.
According to the initial budget for the current fiscal year through March 2022, Japan’s primary deficit has more than doubled to ¥20.36 trillion from the amount in the previous year’s initial plan, due to a decrease in tax revenue and increase in expenditure under the pandemic.
Takaichi said at a news conference last week that her economic plan is a remodeled version of former Prime Minister Shinzo Abe’s economics program, dubbed “Abenomics,” which consists of “three arrows” of monetary easing, agile fiscal spending to deal with the pandemic and other possible emergencies, boosting investment in crisis management, and economic growth.
Under what she calls “Sanaenomics,” Takaichi plans to spend around ¥100 trillion over 10 years.
Will fiscal consolidation be a priority for ruling party's new leader?
Japan looks poised to put even less emphasis on fiscal consolidation under the new leader of the ruling Liberal Democratic Party when the successor to Prime Minister Yoshihide Suga forms a new government.
Most candidates for the Sept. 29 party leadership race have pledged large-scale economic measures ahead of the start of campaigning on Friday as they bid to address the coronavirus crisis and return growth to the pandemic-hit economy.
Each is playing up a bold economic package ahead of a general election that must be held by Nov. 28.
The winner will replace Suga, who announced his intention to resign earlier in the month, as prime minister given the party controls the powerful lower house of parliament. The next leader will be tasked with attending to Japan’s fiscal health, which is the worst among major developed countries.
The world’s third-largest economy is saddled with public debt of more than ¥1,200 trillion ($10 trillion), or over 200% of its annual gross domestic product, as of the end of March.
Among three main contenders, former communications minister Sanae Takaichi appears more likely to be proactive on fiscal spending than former Foreign Minister Fumio Kishida and vaccination minister Taro Kono, analysts say.
“The three contenders can distinguish themselves by launching their own fiscal policy and growth strategy, and Ms. Takaichi’s fiscal policy looks most expansionary and (under which) it would be easy to increase budget deficits,” said Yoshimasa Maruyama, chief economist at SMBC Nikko Securities.
Takaichi, who seeks to be the first female prime minister in Japan, said the government’s goal of putting its primary balance into the black by fiscal 2025 should be shelved until the Bank of Japan achieves its 2% inflation target.
The primary balance — tax revenue minus spending other than debt-servicing — is regarded as an important fiscal soundness indicator.
According to the initial budget for the current fiscal year through March 2022, Japan’s primary deficit has more than doubled to ¥20.36 trillion from the amount in the previous year’s initial plan, due to a decrease in tax revenue and increase in expenditure under the pandemic.
Takaichi said at a news conference last week that her economic plan is a remodeled version of former Prime Minister Shinzo Abe’s economics program, dubbed “Abenomics,” which consists of “three arrows” of monetary easing, agile fiscal spending to deal with the pandemic and other possible emergencies, boosting investment in crisis management, and economic growth.
Under what she calls “Sanaenomics,” Takaichi plans to spend around ¥100 trillion over 10 years.
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