Japan finance minister vows to keep eye on fiscal balance
Continued concerns over Japan’s fiscal sustainability have sparked a rise in government bond yields and weighed on the yen.
TOKYO—Japan's finance minister, Satsuki Katayama, reaffirmed her commitment to maintaining a balance between fiscal sustainability and economic growth, despite ministries submitting record budget requests amounting to nearly $918 billion. This figure, equivalent to 143 trillion yen, aligns with Prime Minister Sanae Takaichi's goal of reducing reliance on supplementary budgets.
The fiscal 2025 supplementary budget and the current year's regular spending together totaled around ¥141 trillion, marking an increase of approximately ¥2.5 trillion from previous estimates. Katayama dismissed the increase as insignificant during a press conference on Friday. Concerns over Japan's fiscal sustainability have resulted in higher government bond yields and a weaker yen.
The 10-year Japanese government bond yield has recently reached 3%, the highest level since September 1996, driven by expectations of an imminent interest-rate increase by the Bank of Japan. Despite elevated yields, Japan's currency has shown signs of recovery recently, strengthening amid historic intervention in the foreign-exchange market by the U.S. Treasury Secretary Scott Bessent.
Katayama addressed concerns that Bessent was pressuring Japan to raise interest rates, stating that she had explained Takaichi's emphasis on sustainable debt conditions and economic growth to him during their meeting at the Group of 20 finance chiefs' summit.
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