Japan Finance Minister warns against any changes to the debt redemption rule

By Tetsushi Kajimoto

TOKYO, Reuters – Shunichi Suzuki (Japan Finance Minister) cautioned against any changes to the government’s debt redemption rule. This helps the government keep fiscal discipline.

Suzuki made these remarks after Friday’s cabinet meeting. Some Liberal Democratic Party lawmakers (LDP) are calling for a 60 year redemption period to allow for more debt issuance.

An LDP panel headed by Koichi Hagiuda (party policy research chief), is currently debating whether to revise the rule. The panel was charged with finding funding sources for the controversial plan to increase defence spending.

Redeeming construction bonds and deficit-covering bond is subject to the 60 year redemption rule. This means that all bonds, including refunding ones, can be redeemed within 60 years.

“This 60 year redemption rule was established to ensure funding sources for the redemption of JGBs, and to reduce fiscal burdens. This rule allows for discipline.

“The 60-year redemption rules in Japan are one way to maintain fiscal discipline. “We must consider how the loss or modification of this rule will be perceived,” he stated, referring to other rules.

Suzuki said that even though the 60 year debt redemption rule was reviewed, the overall amount of government bond issuance would remain constant.

(Reporting by Tetsushi Kajmoto; Editing: Christian Schmollinger, Jacqueline Wong