Japan strives to control debt in face of rising rates
[deflation and lower energy costs are saving ass right nao-that is finite and the LDP is on life support and Kishida has sacked 12 ministers trying to continue covering for Unification Church political control-at some point it’s going to break and I’d look for some shakeup in the Imperial Family (Hapsburg descendants from Meiji era 1868-1912 marry in) is coming because that is who is in control-these politicians are just taking orders as it’s a train wreck and usually they arrest it (by resigning or calling elections that produce the selected result) before it gets to this level but nope-it appears Kishida is the designated fall guy for the LDP destruction cuz 26% (and could go lower on the next release) approval rate is worse than Potato]
Japan's finance minister on Friday said he would strive to contain the risk of runaway debt after unveiling an annual budget as speculation mounts the central bank will shift away from more than two decades of ultra-easy monetary policy. The world's third-largest economy is under pressure to restore its fiscal health after prolonged stimulus and spending worsened a national debt that is the heaviest in the industrialized world.
In calculating borrowing costs, the government adopted a higher interest rates estimate - 1.9% from the current 1.1% - in the budget plan for the coming fiscal year, which would mark the first increase in 17 years. “When we return to life with interest rates, and if interest rates continue to rise to push up interest payments, that could affect fiscal management, squeezing policy outlay," Shunichi Suzuki told reporters after the government crafted the fiscal 2024/25 budget.
"The government needs to minimize such risks. To achieve that, we must limit bond issuance and curb interest payments for the future through efforts such as securing stable funding sources and strike a balance in compiling budgets." The budget for the fiscal year that starts in April is estimated at 112.07 trillion yen ($787 billion), down 2% from the current year's initial amount of 114.4 trillion yen. The budget is still above 110 trillion yen for two straight years, inflated by the cost of military outlay to deal with threats from China and North Korea and welfare costs for Japan's ageing population. The plan shows its debt dependence at 31.2%,meaning new bond sales account for one third of the budget.More than two decades of super-low interest rates have loosened fiscal discipline in a country whose public debt is more than double the size of the economy as a result of rounds of fiscal stimulus.
"The bulk of spending cuts comes from reduction of COVID-led emergency reserves. Excluding such factors, spending reform made little headway," Takahide Kiuchi, economist at Nomura Research Institute, said. “Policymakers must have a sense of crisis and guide responsible fiscal policy as the Bank of Japan normalizes monetary policy. Unexpected rate rises would further aggravate public finances." The higher assumed rates would push up debt-servicing costs to 27 trillion yen in fiscal 2024/25, up 7% from this year. Analysts say it is unlikely Japan will meet its aim of getting the primary budget balance, excluding new bond sales and debt servicing costs, into the black by the fiscal year-end in March 2026. “What's important is to present a credible plan to restore public finances even if it causes a delay in achieving the target," Takuya Hoshino, senior economist at Dai-ichi Life Research Institute, said.
"I think they are going to review the target sooner or later," Hoshino said. "They would likely delay the PB target." [good luck with that as you aren’t ever gonna get in front of this since you own the markets and stopping that would destroy them-so yet another YE window dressing exercise]
https://www.asahi.com/sp/ajw/articles/15093043
Japan Falls to 30th in Labor Productivity among 38 OECD Countries
https://jen.jiji.com/jc/eng?g=eco&k=2023122201135
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