Wed, 27 Sep 2023

TOKYO, Japan: To counter the declining national birthrate, Japan's Prime Minister Fumio Kishida pledged to double spending over the next three years, including allocating $26 billion for childcare subsidies.

The move will add more debt to Japan, with public debt more than double the size of the economy, as well as further aggravate the government's fiscal position.

Kishida told ministers this week that he would increase the country's planned childcare spending, which is a leading agenda item for his administration's mid-year economic policy guidelines, which will be implemented in mid-June.

Economy Minister Shigeyuki Goto quoted Kishida as saying that the measures aim to support higher education, prevent child abuse in poverty, and ensure medical care for handicapped children.

Kyodo news agency reported that the government is also leaning towards introducing a new type of bond to raise funds for education fees.

"The talk of this budget comes at delicate time when the government tries to bring in the primary budget surplus, while government debt balloons," noted Koya Miyamae, senior economist at SMBC Nikko Securities, as quoted by Reuters.

"It could complicate matters when it comes for the Bank of Japan to alter monetary easing, at the risk of shooting up borrowing costs," he added.

While the Japanese government aims to take advantage of increased premiums for public medical insurance and cut other social welfare costs to fund more childcare spending, Kishida has ruled out sales tax hikes as an option.

Official data showed that births in Japan plunged to a record low in 2022, dropping below 800,000 for the first time.

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