Japan PM Takaichi: Impact of new debt to be offset by higher tax revenue
Japan Prime Minister (PM) Sanae Takaichi said during the European trading session on Monday that the potential new debt to compensate for higher household utility and gas bills won’t impact bond markets, as it will be offset higher tax and other revenue sources.
Remarks
To implement support to curb household utility and gas bills from July to September.
Will compile an extra budget of more than 3 trillion Yen.
Will approve electricity and gas subsidy on Tuesday.
Electricity and gas subsidy to cost about 500B yen.
Will issue new deficit financing bonds to finance extra budget. Won't increase bond issuance on a calendar basis.
But will have no impact on the bond market as new debt will be offset by higher tax revenue, others.
It's possible to secure oil supply until next spring.
Will make utmost efforts to avoid market disruptions that were seen in the oil shock era.
To raise the ratio of nuclear and renewable energies to up to 70% from the current 30%.
To call for energy saving that we have done during every summer and winter since the oil shock. Minister Akazawa to announce details of the energy saving measures tomorrow.
Will earn market trust by reducing debt-to-GDP ratio.
Market reaction
No immediate response by the Japanese Yen (JPY) after Japan PM Takaichi's comments. The reasoning behind the JPY remaining unchanged after Takaichi's comments appears to be that government's decision to raise new debt has already been announced last week. As of writing, USD/JPY trades 0.2% higher to near 159.00.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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