Kishida Cautious over Review of JGB Redemption Rules

Jiji Press

11:00 JST, January 26, 2023

TOKYO (Jiji Press) — Prime Minister Fumio Kishida on Wednesday expressed caution over a proposed review of the 60-year redemption rules for Japanese government bonds as a way to generate funds to cover planned defense spending hikes.

“We need to consider the fact that such a change in the rules would result in an increase in JGB issuance, and also should take into account the impact on market confidence,” he said at a plenary meeting of the House of Representatives, the lower chamber of the Diet.

The review has been proposed by some in the Liberal Democratic Party-led ruling coalition.

The prime minister sought understanding for the government’s plan to secure ¥43 trillion in defense funding over the five years through fiscal 2027, saying, “We are facing the most severe and complicated security environment since the end of World War II, and stable financial sources are therefore essential.”

Kenta Izumi, chief of the main opposition Constitutional Democratic Party of Japan, said that Kishida should dissolve the all-important lower house for a general election to seek a mandate for the prime minister’s plan to raise taxes to cover part of the defense spending increases.

In reply, Kishida said, “I will make an appropriate decision [on the timing of a possible Lower House breakup] as a matter for the prime minister’s exclusive authority.”