Japan LDP Lawmakers Call for Easing JGB Redemption Rule

Economy Politics

Tokyo, Jan. 16 (Jiji Press)--Some lawmakers of the ruling Liberal Democratic Party are calling for reviewing the 60-year redemption rule for Japanese government bonds to help secure funds for a planned defense spending increase.

The government plans to double its defense spending to 2 pct of gross domestic product in five years. It hopes to procure the necessary financial resources partly by raising some taxes and partly through spending reform and other measures, but details of the measures have not been decided.

In the LDP, calls are increasing for easing the 60-year rule to make it easier to finance the defense spending increase. Meanwhile, the government is cautious about such a change due to concerns about fiscal discipline.

When government bonds reach their maturity dates, the government redeems part of the debts with cash and rolls over the rest by issuing refunding bonds. But the debts must be fully repaid within 60 years of the issuance of the original bonds.

For fiscal 2023, the government plans to spend 16 trillion yen to redeem bonds under its draft regular budget to be submitted to the Diet, the country’s parliament, next week. The amount is nearly 15 pct of the total general-account spending of 114,381.2 billion yen.

[Copyright The Jiji Press, Ltd.]

Jiji Press