Japan Press Weekly

Tweet

2013 January 16 - 22 [POLITICS]

Abe’s back-to-the-past economic policy relying on issuance of gov’t bonds is irresponsible

Akahata editorial (excerpts)

The administration of Prime Minister Abe Shinzo has decided to issue nearly eight trillion yen in government bonds as funds for an economic stimulus package and pension programs. This has raised public concern over national finances.

In a draft of the supplementary budget for FY2012, the government plans to sell a total of 7.8 trillion yen in state bonds, which include 5.2 trillion yen for a fund for the 10 trillion yen stimulus package and 2.6 trillion yen for the government share of the burden for the basic pension program. In addition to the amount of bonds issued under the initial budget, the total amount of bond issuance during this fiscal year will reach 52 trillion yen. The dependence of the national budget on government bonds is 51.8%, the third highest rate in history.

Based on a lesson that the pre-war Japanese government caused economic and financial collapse because it funded the huge amount of military expenditure with the sale of state bonds, Japan’s current public finance act sets a limit on issuance of government bonds.

Consecutive Japanese governments, which were mainly led by the Liberal Democratic Party, however, ignored the limit and issued government bonds for large public works projects such as useless dams, huge ports, and airports with no regular flight services. Such policies resulted in the increase in the national debt.

The Abe government’s economic measures against deflationary recession put emphasis on public works projects, including the construction of expressways and the development of major ports into ones with international container wharf capacities under the guise of strengthening international competitiveness. Additional issuance of state bonds for the questionable public works projects will further harm Japan’s financial standing.

The need now is to push the Abe administration to implement economic policies focusing on economic recovery through an increase in workers’ incomes and consumer spending, instead of the current policies heavily relying on public works projects and issuance of national bonds.