Japanese Minister of State for Economic and Fiscal Policy Kaoru Yosano said yesterday the government may need to spend between ¥10 trillion and ¥15 trillion (US$184 billion) on reconstruction in the wake of the devastating earthquake that hit the country’s northeast in March.
The government may need to issue bonds to meet the cost, but should not do so without coming up with ways to pay for redemption, Yosano said, signaling that some form of tax hike would be inevitable.
“I understand those who say we need to issue bonds for quake [reconstruction], but we shouldn’t borrow recklessly without thinking about how to pay the money back,” Yosano told a television program.
“If we were to issue bonds for reconstruction, we need to decide in how many years we would pay the money back and how. That’s important in maintaining market trust in Japan’s fiscal state,” he said.
Japan is reeling from the triple disaster of an earthquake, tsunami and prolonged nuclear crisis, with the government struggling to find ways to pay for the biggest reconstruction effort since the aftermath of World War II.
Damage from the quake pushed Japan into recession with the economy shrinking much more than expected in the first quarter of the year and set to contract again in the second quarter as power shortages and supply chain disruptions hit factory output.
The Diet earlier this month passed the government’s ¥4 trillion first extra budget to meet immediate disaster relief costs.
The government plans to compile a sizable second extra budget for reconstruction, although lawmakers are divided on how to pay for the extra spending.
Japan’s public debt, at double the size of its US$5 trillion economy, is the biggest among major industrialized economies, limiting room for additional fiscal stimulus.
However, lawmakers are hesitant to raise tax, particularly the politically sensitive sales tax, for fear of scaring voters away, even as the cost of quake reconstruction adds to the huge social welfare spending for a rapidly ageing society.
Yosano, regarded as a fiscal hawk, has said that raising tax is crucial for Japan to meet ballooning social welfare costs and fix the country’s tattered finances.
This week’s undoing of the TerraUSD algorithmic stablecoin and its sister token, Luna, has ramifications for all of crypto. First, there is the immediate impact: The rapid collapse of a once-popular pair of cryptocurrencies sent a ripple effect across the industry, contributing to plummeting coin prices that wiped hundreds of billions of market value from the digital-asset market and stoked worries over the potential fragility of digital-asset ventures. Then there are the knock-on effects. In addition to delivering punishing losses to individual users and investment firms, the spectacular failure of a market darling like Terra threatens to have a cooling effect
China’s biggest chipmaker has cut its outlook for the second quarter, joining a growing list of manufacturers warning about the fallout from lockdowns aimed at containing the country’s worst COVID-19 outbreak in two years. Semiconductor Manufacturing International Co (SMIC, 中芯) estimates a month-long lockdown in Shanghai could spur component shortages and logistics tangles, and erase about 5 percent of its output in the second quarter. “We are trying our best to mitigate the impact on product delivery,” SMIC Chairman Gao Yonggang (高永崗) told analysts on a call yesterday morning. “We are still assessing the actual impact as many suppliers restart their
DISRUPTIONS: The war in Ukraine, China’s lockdown measures, rising interest rates and inflation have thrown a wrench into business plans made years in advance Samsung Electronics Co is talking with foundry clients about charging as much as 20 percent more for making semiconductors this year, joining an industry-wide push to hike prices to cover rising costs of materials and logistics. Contract-based chip prices are likely to rise around 15 percent to 20 percent, depending upon the level of sophistication, people familiar with the matter said. Chips produced on legacy nodes would face bigger price hikes, while new pricing would be applied from the second half of this year, they said, adding that Samsung has finished negotiating with some clients and is in discussions with others. Samsung’s decision
material SHORTAGE: Even as workers are about to return, Quanta lacks operating supplies, while Pegatron reported its lowest revenues in 11 quarters, the companies said Taiwan’s major Apple Inc supplier cut its outlook for the second quarter, joining a growing list of manufacturers warning about the fallout from lockdowns aimed at containing China’s worst COVID-19 outbreak in two years. Quanta Computer Inc (廣達電腦), which assembles MacBooks, expects a 20 percent quarterly fall in notebook shipments and a squeeze on margins this quarter due to the lockdown, a company representative said on Friday during an earnings call. The impact from supply chain disruptions could last until the end of the year, she said. The company’s Shanghai factory has been operating under tight restrictions since the middle of last month,