– Candidates who could become Japan’s next prime minister began to emerge after Prime Minister Yoshihide Suga announced last week that he was stepping down as head of the Liberal Democratic Party.
The LDP will vote on September 29 for a new leader, and Suga’s successor will lead the party to a general election due to be held by November 28. Below are the main views of the candidates on economic policy.
A former foreign minister with experience as a banker, Kishida had previously said that if he were to become a leader, fiscal consolidation would be a major pillar of policy.
He also expressed doubts about the Bank of Japan (BOJ) extended the ultra-flexible monetary policy, saying that in 2018 the stimulus cannot last forever.
As the economy suffers from COVID-19, Kishida said Wednesday at a press conference outlining his economic policy that the BOJ must maintain its inflation target of 2% and its ultra-accommodative monetary policy.
He told a magazine on Monday that Japan needed a more than 30 trillion yen ($ 272 billion) fiscal stimulus package.
Kishida’s economic position differs somewhat from that of Suga, who took over much of the “Abenomics” stimulus policy from his predecessor Shinzo Abe.
Kishida said Japan could not solve structural problems simply by supporting growth, distancing itself from the Abenomics who sought to mend tattered finances by achieving high growth and increasing tax revenues.
Kishida also stressed the need to distribute more wealth to households, in contrast to the focus by Abenomics on increasing corporate profits in the hope that the benefits will eventually trickle down to employees.
“There is no doubt that the Abenomics have made a major breakthrough in growth, but in terms of the distribution of wealth, the runoff has yet to occur,” he said.
Former home affairs minister and Abe’s close aide, Takaichi said she would keep a reshaped version of “Abenomics,” including bold monetary easing.
Takaichi, calling his economic vision “Sanaenomics,” told a press conference that Japan should freeze a target to achieve a primary budget surplus, excluding new bond sales and service charges. debt, until inflation reaches the central bank’s 2% target, so that fiscal and monetary policies remain expansionary.
“Sanaenomics is built on three pillars: bold monetary easing, budget spending and crisis-control investments,” Takaichi said. “We will mobilize them all to reach the 2% inflation target.
While calling for the speedy compilation and passage of a supplementary budget to fund economic recovery, Takaichi said there was no need to reduce the sales tax rate by 10%.
She said earlier that Japan should issue more government bonds to fund investments in growth areas because it need not worry about defaulting on its debt given current low borrowing costs. and the ability of the central bank to continue printing money.
After serving as minister responsible for administrative reform and deregulation, Kono called for cutting unnecessary spending in areas such as rising medical costs in Japan. On its website, it also offers to accept foreign workers to cope with a chronic labor shortage caused by a rapidly aging population.
As leader of a ruling party panel on administrative reform in 2017, Kono urged the BOJ to communicate more clearly an exit strategy from ultra-loose politics. He said that the more the BOJ continues to expand its balance sheet, “the harder it would be to get out”.
At a press conference on Friday unveiling his political platform, Kono said it would be “difficult” to reach the BOJthe inflation target, urging the central bank to maintain dialogue with the markets. Specific monetary policy should be left to the appreciation of the BOJ decide.
Kono said Abenomics have helped boost corporate profits, but have yet to benefit workers’ wages, adding that the focus should be on supporting citizens rather than businesses. He suggested that the sales tax rate should remain at 10%. Kono signaled that he was prepared to issue more bonds to create a stimulus, but did not give an amount.
Former defense minister and Abe’s rival, Ishiba has sharply criticized the Abenomics, saying the policies have enriched shareholders by supporting stock prices but have brought little benefit to workers.
He also criticized the BOJultra-low interest rates for harming regional banks and called for greater spending on public works to address growing inequalities.
In an interview with Reuters last year, Ishiba said that Japan’s fiscal and monetary stimulus measures have become so important that their removal could destabilize the economy.
He keeps his distance from the supporters of big spending. In the interview, Ishiba cautioned against cutting sales tax or offering block payments, saying any aid must be targeted at households and small businesses hardest hit by the pandemic.
($ 1 = 110.2800 yen)