Japan Govt Urged to Ensure Market Credibility

Tokyo, Feb. 24 (Jiji Press)–Private-sector members of a key Japanese government panel on Tuesday called on the government to ensure market credibility through appropriate dialogue when making policy shifts. While expressing support for the policy changes planned by Prime Minister Sanae Takaichi’s administration, the private-sector members of the Council on Economic and Fiscal Policy underlined the need to closely monitor developments in financial and capital markets. The council held its first meeting following the Feb. 8 House of Representatives election, in which the ruling Liberal Democratic Party won a landslide victory, to discuss the full-scale shift to the “responsible and proactive” fiscal policy touted by the prime minister. In her policy speech before the Diet, the country’s parliament, on Friday, Takaichi pledged to “break the long-standing trend of excessive austerity and insufficient investment for the future.” “We should not hesitate to take necessary fiscal measures,” the prime minister said. Meanwhile, long-term interest rates in the country rose sharply and the yen weakened rapidly due to concerns over fiscal deterioration that grew after she announced a plan to cut the consumption tax rate on food to zero for two years before she dissolved the lower chamber of the Diet for a snap general election. Against this background, the private-sector members asked the government to clarify the goals and concrete measures of the fiscal policy advocated by the prime minister. They said dialogue with the markets is “crucial” at a time when interest rates are rising due to policy rate hikes by the Bank of Japan. Also at the day’s meeting, the private-sector members said that the past 30 years have been marked by excessive austerity amid deflation. In response, Takaichi said, “We will break away from excessive austerity and insufficient investment for the future in a bid to realize a strong economy through bold public-private investment.” The prime minister also said the government will allocate necessary funds under its initial budget as much as possible by reviewing the budget compilation policy that relies on supplementary budgets. The private-sector members called for deepening discussions on a refundable tax credit system and the proposed reduction in the consumption tax rate on food items. They also underlined the need for measures to curb social insurance burdens on the working generation and initiatives to raise the potential growth rate. END [Copyright The Jiji Press, Ltd.]