Japan’s Suga gives fiscal, monetary policy views

Protecting jobs: A delivery courier arrives at a restaurant to pick up orders for customers. Suga is thinking about a new policy to help consolidate smaller businesses. — Bloomberg

TOKYO: Japanese chief cabinet secretary Yoshihide Suga signalled a continuation of the super-easy monetary policy pursued by the Bank of Japan (BoJ), and ruled out any cuts to the country’s consumption tax in newspaper interviews as he seeks to succeed outgoing Prime Minister Shinzo Abe.

Suga, who has emerged as Abe’s most likely successor, told the Nikkei he “highly appreciates” the central bank’s policy and wants “to inherit the current framework, ” referring to BoJ governor Haruhiko Kuroda’s massive quantitative easing program. Abe’s deputy told the Mainichi newspaper that cutting the consumption tax isn’t an option.

The chief cabinet secretary is the favourite to clinch the Sept 14 Liberal Democratic Party leadership election that will effectively select the next premier.

Suga, 71, has vowed to defeat the coronavirus crisis, protect jobs and break down the silos between different ministries and agencies to achieve reform, all of which indicate a continuation of Abe’s policies.

Suga also told the Nikkei he is thinking about a new policy to help consolidate smaller businesses in an effort to stimulate the sector, while looking into the possibility of setting up a new government agency to deal with digital policy.

Revenue from last year’s increase in the consumption tax is necessary to help the young and pay for education for children, and should not be lowered, Suga told Mainichi newspaper.

He also said the lower house shouldn’t be dissolved for an election until coronavirus infections subside. Lower house terms expire in October 2021.

The government should implement policies to protect employment and business operations now to counter the impact of the virus, Suga said in the interview.

Suga’s support helped Abe turn an unlikely 2012 comeback into a record-breaking run as premier.

Any sign of a departure from the path of Abenomics could send the yen surging and stocks sliding, triggering a re-evaluation of the outlook for the nation.

One of the first key economic decisions of the new prime minister will be the timing of a switch to stimulating a return to growth rather than focusing on life-support aid for businesses and households. — Bloomberg

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