Balancing Growth, Fiscal Reform Key Issue for New Takaichi Cabinet

Tokyo, Sept. 18 (Jiji Press)--Balancing efforts to secure economic growth and promote fiscal discipline will be a major issue for Japanese Prime Minister Sanae Takaichi's cabinet, which was reshuffled Wednesday.

The Takaichi government is set to fully start work on the compilation of its fiscal 2027 budget.

While budget requests from government agencies and ministries have reached a record high above 143 trillion yen as the administration aims to make the country's economy resilient, the yen and Japanese government bonds are coming under selling pressure amid concerns among investors about further deterioration in public finances.

Close attention is being paid to whether the government can secure financial resources, without issuing deficit-covering bonds, for a planned two-year consumption tax rate cut to 1 pct from the current 8 pct for food from April 2027, a measure to help ease the impact of inflation.

A total of about 5 trillion yen is forecast to be needed a year for the tax cut and an envisioned benefit program. The government plans to cover the costs through a revision of spending and revenue, but little progress has been made in the work on reductions in subsidies and special tax breaks, seen as a major financial resource.

[Copyright The Jiji Press, Ltd.]