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.
Alphabet Inc’s Google on Tuesday announced plans to buy a New York office building for US$2.1 billion, confirming its push into the US’ largest city despite the COVID-19 teleworking trend. This is the largest real-estate purchase in the US for an office building since the beginning of the global spread of COVID-19, the Wall Street Journal quoted Real Capital Analytics as saying. Google already rents the premises in Manhattan, which are located on the site of a former railroad terminal in the Hudson Square neighborhood. The Silicon Valley giant envisions a campus with a total surface area of 160,000m2 by mid-2023
‘CORE VALUES’: The contract chipmaker did not specify why the employees were dismissed, but media reports said they had leaked information about customer orders Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has fired seven of its employees for violating the company’s “core values,” the world’s largest contract chipmaker said yesterday. While the company did not disclose exactly why it fired the seven employees, local media reports earlier in the day said that the employees had leaked confidential information about customer orders. In a statement, the company said that it fired the seven at once, adding that it released an internal notice last week to inform the entire company of the move ahead of the four-day Mid-Autumn Festival holilday, which ended on Tuesday. TSMC said it fired the seven
MILD ADJUSTMENT: Two previous efforts failed to curtail mortgage financing, although the new measures should not affect property prices, the central bank governor said The central bank yesterday tightened credit controls for second-home mortgages in specific areas and purchases of plots of land, especially in industrial parks. However, the nation’s top monetary policymaker kept its policy rate at a record-low 1.125 percent for the sixth consecutive quarter, despite revising up its GDP growth forecast for this year from 5.08 percent to 5.75 percent. “Board members factored in economic uncertainty at home and around the world,” central bank Governor Yang Chin-long (楊金龍) said, adding that growing inflationary pressure was a temporary phenomenon induced by bad weather and a low base effect for oil prices. International fuel price increases
DOWNCYCLE: Most buyers are wary about placing new orders, and although the decline could also be as little as 3%, it would be the first drop since the start of the year The average selling price of DRAM chips next quarter is expected to decline by up to 8 percent quarter-on-quarter, with memory chips used in notebook computers and consumer electronics seeing the steepest decline due to excess inventory and a shortage of components, market researcher TrendForce Corp (集邦科技) said yesterday. That means the DRAM industry is entering a new downcycle after experiencing a boom for three quarters, the longest uptrend in the history of the industry. The Taipei-based researcher said it expects the balance between supply and demand to begin tilting toward a surplus in the final quarter of this year. Most DRAM