Japan Cabinet reshuffle keeps Takaichi’s top team intact as food tax cut looms

TOKYO, September 17 — Japan's Prime Minister Sanae Takaichi maintained her core ministers in a cabinet reshuffle held on Thursday, as the ruling coalition strove for strength and to progress a food tax reduction, despite worries on its financing. In Japan, Prime Ministers frequently rearrange their cabinets to rejuvenate public perception and allocate ministerial roles to devoted supporters and seasoned lawmakers from their party.

However, Takaichi, who enjoys remarkably high approval ratings almost a year after assuming office, preserved her team's key members, according to a cabinet roster released by her confidante and chief government spokesperson, Minoru Kihara. These include Kihara, Finance Minister Satsuki Katayama, Foreign Minister Toshimitsu Motegi, and Defence Minister Shinjiro Koizumi.

"Without economic growth, we cannot sustain sustainable finance," Takaichi declared to reporters, vowing to pursue her "responsible, proactive fiscal policy." By stimulating domestic investment, enhancing employment and household income, her aim is to establish a virtuous cycle of economic growth enabling Japan to augment tax revenue, she explained.

Takaichi also retained crucial economic ministers like Trade and Industry Minister Ryosei Akazawa, who has managed Japan's tariff negotiations with the United States, and Economic Growth Strategy Minister Minoru Kiuchi, who advocates for active fiscal spending. Under Finance Minister Katayama, Japan has regularly intervened in the foreign exchange market to bolster the weakening yen, including a rare joint intervention with the United States.

The minor reshuffle took place as Takaichi tackles surging inflation and a weak yen while pursuing a food tax cut commencing next year. While Takaichi's tax cut promise is favored by voters, economists have condemned the plan, warning that she has not identified around five trillion yen (RM134.4 billion) needed annually to finance it.

Takaichi's policy of extensive government spending, coupled with the Bank of Japan's relatively restrained interest rate, has also unsettled the markets, driving Japan's benchmark bond yield to approximately 3.0 percent, its highest point in three decades. "We will ensure market confidence by intensifying communication" with constituents and market players, supplying explanations of policy "with a high degree of transparency," Takaichi said when questioned about market apprehensions regarding the fiscal policy’s sustainability.

On defense, Koizumi continues to be responsible for updating Japan’s foundational national defense strategy papers while implementing a push to boost sector spending. "Revising our strategy is something that has a significant impact on Japan's security and on the entire region," Koizumi stated to reporters after his reappointment.

He said the Defense Ministry "must mobilize all our resources and proceed with a greater pace" with the review. Takaichi also appointed the position of Minister in Charge of Regulatory Reform to Hiroshi Nakatsuka, a 70-year-old ally from Takaichi’s coalition partner, the Japan Innovation Party. The JIP forged a ruling alliance with Takaichi’s conservative Liberal Democratic Party in October but had until then decided not to join her cabinet.