"Japanese Prime Minister Sanae Takaichi's tax and spending pledges in advance of snap elections next month have sent jitters through global markets. Japanese government bonds and the yen have been on a rollercoaster since Takaichi unveiled plans to pause the country's consumption tax if her Liberal Democratic Party wins the February 8 vote. The market turmoil reflects concerns about the long-term sustainability of Japan's debt levels, which are the highest among advanced economies."
"Takaichi's tax pledge comes after her Cabinet in November approved Japan's largest stimulus since the COVID-19 pandemic. The package, worth 21.3 trillion yen ($137bn), included one-time cash handouts of 20,000 yen per child for families, subsidies for utility bills amounting to about 7,000 yen per household over a three-month period, and food coupons worth 3,000 yen per person. Japan's long-term government bond yields soared following Takaichi's announcement."
Sanae Takaichi pledged to suspend the 8 percent consumption tax on food and non-alcoholic beverages for two years if the Liberal Democratic Party wins the February 8 election. Markets reacted with sharp volatility in Japanese government bonds and the yen as investors reassessed fiscal risks. The plan would create an estimated annual revenue shortfall of about 5 trillion yen. Takaichi proposed offsetting the gap by reviewing expenditures and tax breaks but provided no specifics. The pledge follows a 21.3 trillion yen stimulus package that included child cash handouts, utility subsidies and food coupons. Rising long-term yields reflect concerns about Japan's high debt and global fiscal sustainability.
Read at www.aljazeera.com
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