Economic policy

Japan’s Kishida to work closely with BOJ on economic policy

TOKYO: Japanese Prime Minister Fumio Kishida pledged on Monday to pull the economy out of the COVID-19-induced slump by communicating closely with the Bank of Japan, while promoting investment to boost sluggish growth.

At a meeting of his economic advisory committee, Kishida said he wanted Economy Minister Daishiro Yamagiwa to prepare for the release of a mid-year policy roadmap next month.

The Council for Economic and Fiscal Policy (CEFP) on Monday unveiled the main lines of the roadmap, focusing on investment in areas such as human resources, innovation, environment, digital and start-ups. ups to achieve what Kishida calls the “new capitalism”.

The plan, Kishida’s first, called for a sustainable medium-term economic and fiscal policy, signaling a gradual shift away from fiscal stimulus as part of his predecessor Shinzo Abe’s stimulus package dubbed “Abenomics”.

He also called for the creation of a sustainable social security system, which has cracked under the snowballing cost of supporting aging populations.

The four private sector advisors to the 11-member CEFP have pushed for a combination of flexible fiscal and bold monetary policies to spur growth and wealth distribution.

Close communication between the government and the BOJ is particularly important in Japan, the world’s third-largest economy, where economic management has for years relied on a combination of fiscal spending supported by ultra-low interest rates.

The relationship between the two has improved since BOJ Governor Haruhiko Kuroda took office in 2013.

At the meeting, Finance Minister Shunichi Suzuki’s Fiscal Policy Advisory Group urged the government to stick to the elusive goal of achieving a primary fiscal surplus, excluding further bond sales and debt service by FY2025.

“While trade deficits may persist and market confidence in the yen is more than ever in question, the risk of losing confidence is great if the target for fiscal reform recedes,” the panel said in a draft. of proposal.