Japan yesterday pledged huge spending cuts amounting to US$83 billion over two years as it works to bring down the industrialized world’s biggest debt mountain.
The cuts — amounting to an average reduction of more than 4 percent of current annual spending — comes days after the IMF warned again over Tokyo’s borrowings.
The moves were outlined in the government’s mid-term fiscal plan which called for cuts of ￥8 trillion (US$83 billion) between April next year and March 2016.
There were few details about where the reductions would be made, and they come after Japanese Prime Minister Shinzo Abe pledged to boost public spending to stoke Japan’s tepid economy.
Another key part of Abe’s plan, dubbed “Abenomics,” was the Bank of Japan’s huge monetary easing plan, unveiled in April, as Tokyo looks to counter years of growth-sapping deflation.
Japan’s annual budget is about ￥93 trillion, with about 40 percent of that spending coming from borrowing which has created a debt pile that is more than twice as big as Japan’s economy — the worst among industrialized nations.
The country has not faced a public debt crisis like the kind seen across the eurozone, largely because most of its low interest rate debt is held domestically rather than by international creditors.
However, the IMF and others have warned that Japan must follow through on key fiscal and structural reforms to the economy, another key plank of Abe’s plan but a difficult sell to many of Japan’s cossetted industries.
On Monday, the IMF called on Tokyo to adopt a “credible” strategy to raise sales taxes to boost government revenue and deregulate the farming sector, among others.
Meanwhile, the Bank of Japan issued an upbeat assessment of Tokyo’s efforts to counter growth-sapping deflation yesterday, as it left its vast monetary easing program unchanged.
In a widely expected move, the central bank said its board voted unanimously to keep the current package of measures in place after a two-day policy meeting.
The bank said the outlook for the world’s third-biggest economy was looking brighter, while early signs of rising prices were good news for its efforts to hit a two-percent inflation target in as many years.
“Japan’s economy is starting to recover moderately,” the bank said yesterday, pointing to better times ahead for key export markets. “Overseas economies as a whole are gradually heading toward a pick-up, although a lackluster performance is partly seen... Inflation expectations appear to be rising as a whole.”
The bank added it would continue its easing plan “as long as necessary” to hit the price target and “make adjustments as appropriate.”
The statement also points to a rise in business and public investment, private consumption and industrial production, while exports were also improving.
END TO SPECULATION: The hotel’s management contract has been extended, despite reports that it wanted to end its alliance with Hyatt Hotels over a deal with Riant Capital Singapore-based Hong Leong Hotel Development Ltd (豐隆大飯店股份) yesterday said it has extended a management contract to ensure the continued presence of the Grand Hyatt brand in Taipei, ending rumors that the two sides were parting ways. “We are pleased Hyatt is able to come to terms on the extension of the management contract of Grand Hyatt Taipei,” said Kwek Leng Beng (郭令明), executive chairman of City Developments Ltd (城市發展) and Millennium & Copthorne Hotels Ltd (千禧國敦酒店). Hong Leong Hotel Development is a subsidiary of Millennium, and both fall under the Hong Leong Group (豐隆集團). The Grand Hyatt Taipei (台北君悅大飯店), owned and built by
’WHITE BOX’: The open platform would give local firms access to Cisco’s cloud-based mobile network to develop 5G telecom equipment and tap into the global market The Ministry of Economic Affairs (MOEA) yesterday introduced a new 5G “open lab” in collaboration with US-based information technology and networking giant Cisco Systems Inc to address the rapidly growing “white box” 5G networking equipment market. The open lab will be a platform where Taiwanese manufacturers can access Cisco’s cloud-based mobile network to develop their own 5G telecom equipment, such as small-cell base stations, network switches, modems and Internet of things (IoT) devices, a ministry statement said. The open platform would allow Taiwanese manufacturers to tap into the lucrative 5G telecom equipment market, which was previously monopolized by Nokia Oyj, Ericsson AB
Nintendo Co is raising its target for Switch production to about 25 million units this fiscal year, people familiar with the matter said, as the ongoing COVID-19 pandemic keeps lifting demand and component shortages ease. The Kyoto, Japan-based company, which in April hiked orders to 22 million units by March next year, is asking partners to tack on another few million units, said the people, who did not want to be identified discussing internal goals. Assembly partners plan to work at maximum capacity through December. The new production target suggests that Nintendo is likely to outperform its Switch sales forecast of 19 million
‘BIG LOSS’: This year might see the last generation of Huawei’s Kirin chips, as their production would stop next month because they are made using US technology Chinese tech giant Huawei Technologies Co (華為) is running out of processor chips to make smartphones due to US sanctions and would be forced to stop production of its own most advanced chips, a company executive has said, in a sign of growing damage to Huawei’s business from US pressure. Huawei, one of the biggest producers of smartphones and network equipment, is at the center of US-Chinese tension over technology and security. Washington last year cut off Huawei’s access to US components and technology, and those penalties were tightened in May, when the White House barred vendors worldwide from using US