Ja­pan may adopt ex­tra bud­get de­spite solid econ­omy

The Star Malaysia - StarBiz - - Foreign News -

TOKYO: The Ja­panese govern­ment is widely ex­pected to com­pile an ex­tra bud­get for this fis­cal year, de­spite the im­prov­ing econ­omy, econ­o­mists polled by Reuters say.

Com­pil­ing ex­tra bud­gets has be­come a habit for Ja­pan as it strug­gles to shore up stag­nant ac­tiv­ity with funds for ev­ery­thing from shop­ping vouch­ers and aid for strug­gling ru­ral re­gions to re­con­struc­tion af­ter the 2011 tsunami and nuclear disas­ter.

This year, how­ever, the Ja­panese and global economies are in good shape, and 31 out of 35 an­a­lysts polled in the Sept 5-12 sur­vey said there was no need for an ex­tra bud­get, be­sides steps for nat­u­ral disas­ter re­lief.

“The econ­omy is at full em­ploy­ment con­di­tions and the global econ­omy is steadily ex­pand­ing,” said Hiroaki Mutou, chief econ­o­mist at Tokai Tokyo Re­search In­sti­tute. “It would not be ac­cept­able to com­pile a huge ex­tra bud­get.”

How­ever, 22 econ­o­mists pre­dicted that the govern­ment would stick with its pat­tern and pass ex­tra spend­ing any­way, the poll showed.

Mutou said the govern­ment might an­nounce a small sup­ple­men­tary bud­get for the year through March, aimed at ar­eas such as lift­ing Ja­pan’s fall­ing birthrate and ed­u­ca­tion.

Both Chief Cab­i­net Sec­re­tary Yoshi­hide Suga and Econ­omy Min­is­ter Toshim­itsu Motegi have said there are no plans for a sup­ple­men­tary bud­get.

Boost­ing govern­ment spend­ing would likely add to Ja­pan’s debt bur­den, which is al­ready more than twice the size of its GDP. An­a­lysts have long warned Ja­pan’s pub­lic fi­nances would col­lapse if its debt prob­lem goes un­solved.

The poll also showed that most an­a­lysts be­lieve the Bank of Ja­pan (BoJ) will keep its cur­rent pace of mon­e­tary eas­ing un­til at least late next year as the pace of gains in con­sumer prices re­main very slow, even though the econ­omy is grow­ing.

A ma­jor­ity of the an­a­lysts polled say the BoJ’s next move will be to scale down cur­rent stim­u­lus mea­sures, rather than ex­pand­ing mon­e­tary eas­ing.

In July, the BoJ main­tained the 0.1% in­ter­est it charges on a por­tion of ex­cess re­serves that fi­nan­cial in­sti­tu­tions park at the cen­tral bank. It also kept its yield tar­get for 10-year Ja­panese govern­ment bonds around zero per cent. — Reuters

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