Japan to review spending to rein in debt

TOKYO (BestGrowthStock) – Japan’s government will review some of the spending plans pledged by the ruling party as part of an effort to rein in the country’s huge public debt, new Finance Minister Yoshihiko Noda said on Sunday.

Prime Minister Naoto Kan, a fiscal conservative who took over the nation’s top job last week after the abrupt resignation of his predecessor, has made tackling Japan’s huge public debt a top priority amid market concerns about sovereign debt risk.

“It’s a very severe situation,” Noda said in a television program on Sunday, referring to the country’s public debt that is near twice the size of its GDP.

Noda said the government would consider which of the spending plans pledged earlier by the Democratic Party to prioritize.

“We can’t change everything (pledged by the party) all of a sudden. But we’ll do it steadily,” he said.

The Democratic Party won power in a lower house election last year with a manifesto pledging generous spending plans, such as payouts to households with children and aid for farmers.

But analysts have said the Democrat-led government needed to scale back the spending plans, as rating agencies threatened to downgrade Japan’s sovereign debt rating unless it came up with a credible plan to fix the country’s finances.

Kan seemed to have got the message.

He told reporters on Saturday he may consider reducing the amount of child allowances paid to households in cash due to fiscal constraints, Japanese media reported on Sunday.

The government is also set to unveil this month medium- and long-term targets to fix Japan’s finances, as well as a strategy to boost the country’s economic growth.

Noda said the government hoped to announce the fiscal targets and the growth strategy on Friday.

Japan’s new prime minister has been more willing to debate tax hikes and review spending plans than his predecessor, although he needs to convince some ruling party lawmakers who are opposed to them for fear of scaring voters away ahead of an upper house election next month.

Stock Market Report

(Reporting by Leika Kihara; Editing by Alex Richardson)

Japan to review spending to rein in debt