Japan signals rise in borrowing
Baku, December 27 (AZERTAC). Japan’s new finance minister has signalled that the government will borrow to boost the struggling economy, as Prime Minister Shinzo Abe unveiled a “crisis beating” cabinet on Wednesday.
At a press conference following his appointment as finance chief, Taro Aso announced he would issue bonds and lift a cap on new debt for the 2012 fiscal year.
As prime minister himself from 2008-09, Mr Aso launched huge economic stimulus packages to combat fallout from the global financial crisis before he lost power.
Mr Abe on Wednesday unveiled a cabinet of close allies and policy experts to push his agenda of economic recovery, just hours after being formally appointed as the country’s seventh prime minister in six years.
He has vowed to create a “crisis-beating government” to tackle the deflation that has dogged Japan for more than a decade and also the strong yen. Mr Abe said he had instructed his cabinet to do their utmost to achieve economic recovery and reconstruction after last year’s devastating earthquake, and to ensure national security.
But the finance ministry is opposed to the kind of big stimulus spending that Mr Abe says is needed to boost the economy, which recently entered its fifth recession in 15 years, unless additional spending is funded by tax increases. It is concerned about Japan’s fiscal situation, with the IMF warning that gross public debt will reach 236 per cent of the size of the economy by next March.
Mr Abe’s government faces mounting tensions with China over territorial issues, and pressure to rebuild its relationship with the US amid growing security threats in the region, notably from North Korea.
Mr Abe said “restoring trust with the US is of utmost priority, and the first step towards rebuilding Japan’s diplomacy and national security is to strengthen the US-Japan alliance, which is the basis of Japan’s diplomacy.”
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