Japan to consider tapping FX account to boost defence spending - Kyodo (updated)
29/11/2022 22:19
(Adds details on account, background on defense spending)
TOKYO, Nov 30 (Reuters) - Japan's government is
considering tapping funds under an account set aside for foreign
exchange intervention to pay for an expected increase in defence
spending, Kyodo news agency reported on Tuesday.
The government could also issue additional bonds until a
decision is made on whether to increase taxes as a long-term
source of funding for the scheduled rise in military spending,
Kyodo said without citing sources.
Prime Minister Fumio Kishida has pledged to boost defence
spending to guard against North Korea's missile launches and
China's increasing military presence in the region.
He instructed his ministers on Monday to work on a plan to
lift defence spending's share of gross domestic product to 2%
within five years, from about 1% now, a move that would strain
Japan's already tattered finances.
Many ruling party lawmakers have voiced opposition over
raising tax, a step preferred by the finance ministry, to pay
for increased defence expenditure due to concern it will hurt
the fragile economy.
With the decision on tax likely to take time, the government
will consider tapping retained earnings from the special account
for foreign exchange intervention, which manages the country's
foreign asset holdings, Kyodo reported.
The account reaps roughly 2-3.5 trillion yen ($14-25
billion) in retained earnings annually, and had been tapped in
the past to fill short-falls in the general account budget, it
said.
($1 = 138.7000 yen)
(Reporting by Leika Kihara; editing by Jonathan Oatis and
Stephen Coates)
((leika.kihara@thomsonreuters.com; +813-6441-1828; Reuters
Messaging: leika.kihara.reuters.com@reuters.net))