Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Japan's finance minister says addressing rising cost of living, as extra budget debated

Published 25/05/2022, 02:25 pm
Updated 25/05/2022, 08:31 pm
© Reuters. Japan's Finance Minister Shunichi Suzuki prepares to ring a bell during the New Year ceremony marking the open of trading in 2022 at the Tokyo Stock Exchange (TSE), amid the coronavirus disease (COVID-19) pandemic, in Tokyo, Japan, January 4, 2022. REUTER

© Reuters. Japan's Finance Minister Shunichi Suzuki prepares to ring a bell during the New Year ceremony marking the open of trading in 2022 at the Tokyo Stock Exchange (TSE), amid the coronavirus disease (COVID-19) pandemic, in Tokyo, Japan, January 4, 2022. REUTER

By Tetsushi Kajimoto

TOKYO (Reuters) -Urgent steps will be taken to ease pain caused by the surging cost of living in Japan, and to help the economy recover from the ill-effects of COVID, Finance Minister Shunichi Suzuki said as he presented a supplementary budget to parliament.

Lawmakers began debating on Wednesday the proposed extra budget - worth 2.7 trillion yen ($21 billion) - to help households and small firms cope with high energy and food prices.

The government plans to spend 1.17 trillion yen of it on mitigating the effect of rising global oil prices. This will include subsidising gasoline wholesalers.

"Uncertainty about the outlook is rising, mainly because Russia's invasion of Ukraine has destabilised crude oil and commodity prices," Suzuki told the lower house of parliament.

"That could hamper the pace of economic recovery from the coronavirus."

The supplementary budget also includes 1.52 trillion yen for budget reserves that the government will be able to spend later as necessary.

Suzuki said he would encourage firms to smoothly pass on rising costs and raise wages to generate a virtuous cycle of growth that will help to ensure Japan's economy recovers from the impact of the pandemic.

The extra budget will be funded by bond sales, which could further strain a public debt that is already more than twice as large as annual economic output.

To prevent the huge debt from becoming unmanageable, Suzuki's fiscal advisory panel urged the government to stick to its aim of achieving a primary budget surplus, which excludes new bond sales and debt servicing, by the end of fiscal year in March 2026.

"As a trade deficit may take hold from now on, market confidence in the yen and the fiscal situation will be called into question more than ever," the panel said in its fiscal reform recommendations.

"If the primary balance target takes a step backward, the risk is large for Japan to lose market trust."

© Reuters. Japan's Finance Minister Shunichi Suzuki prepares to ring a bell during the New Year ceremony marking the open of trading in 2022 at the Tokyo Stock Exchange (TSE), amid the coronavirus disease (COVID-19) pandemic, in Tokyo, Japan, January 4, 2022. REUTERS/Issei Kato/File Photo

The finance ministry wants the government to include the balanced budget target in its mid-year policy roadmap, but there are divisions over the plan within the ruling Liberal Democratic Party (LDP).

($1 = 127.0200 yen)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.