Japanese ruling party executives demand $ 290 billion in stimulus

Tokyo — A ruling party executive close to Prime Minister Fumio Kishida said Japan must put together an economic stimulus package of at least JPY 32-33 trillion ($ 282-290 billion) to mitigate the effects of the coronavirus pandemic. ..

Kozo Yamamoto, the designer of former Prime Minister Shinzo Abe’s “Abenomics” stimulus package, said that such a large amount of spending would be needed to fill the output gap in Japan and reach the central bank’s 2% inflation target. Said that it would be.

“This package can be funded by issuing Japanese government bonds (government bonds),” said Fumio Kishida, an associate in charge of economic policy. “The government needs to issue large numbers of long-term government bonds that central banks can actively buy.”

Former Treasury official Yamamoto has been deeply involved in the creation of Abenomics, a combination of large-scale monetary and fiscal stimulus measures, and the growth strategy developed in 2013 to bring Japan out of economic stagnation. I did.

Fumio Kishida said he would maintain the stimulus for Abenomics and take additional steps to distribute wealth more widely to households. The prime minister also promised to put together a spending package worth “tens of trillions of yen.”

“The most important thing is to achieve strong economic growth with the three arrows of Abenomics. Only then can we talk about redistribution,” said Mr. Yamamoto, who frequently exchanges emails with Kishida. Told.

According to Yamamoto, Japan will eventually need to raise taxes on capital gains and dividends to close income inequality, but it will take at least 2023 to reveal the details.

Mr Yamamoto, who led the party’s financial problems, reiterated the need for Japan to act swiftly toward the issuance of the Central Bank Digital Currency (CBDC).

That would require amendments to the law governing the Bank of Japan, which would create opportunities for other changes, such as adding job creation to the central bank’s mission, he said.

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

Currently, the Bank of Japan has a mission of stabilizing prices and public finances, but has not stipulated expansion of employment.

($ 1 = 113.5300 yen)

Reika Kihara, Takaya Yamaguchi