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Wednesday, March 11, 2009
Yosano sets aside fiscal discipline
Finance Minister Kaoru Yosano said Tuesday he will put on hold the quest to restore the nation's fiscal health and pull out all stops to revive the economy, which continues to dive.
"I will temporarily suspend my (efforts) as an advocate of fiscal discipline," Yosano told reporters.
One of the most vocal advocates of fiscal rehabilitation, Yosano indicated it is possible for the government to issue deficit-covering bonds to finance more fiscal spending.
"I will approve all measures," Yosano said when asked about fiscal resources to fund additional stimulus steps.
To combat the recession, Prime Minister Taro Aso is expected to order the Liberal Democratic Party-New Komeito ruling bloc to compile additional economic stimulus measures to spur consumption and improve the employment situation, and possibly finance them via the issuance of interest-free national bonds.
Yosano, who serves concurrently as finance minister, financial services minister and economic and fiscal policy minister, has long been known as a fiscal hawk, advocating tax hikes and tough fiscal discipline.
Some economists welcomed Yosano's about-face amid the deepening economic crisis.
"In normal times, the priority would be to maintain fiscal discipline," said Keisuke Naito, senior economist at Mizuho Research Institute Ltd.
"But since not only Japan but the entire world is in an extremely severe economic state, priority must be to (mitigate) the crisis."
Also, because of plunging exports, economic stimulus steps outweigh fiscal reconstruction, Naito said.
The government needs to prop up demand by subsidizing manufacturers and public investments even by issuing deficit-covering bonds, he added.
"Needless to say, fiscal reconstruction will once again be a priority after prospects for an economic recovery are in sight," Naito noted.