A Rift Between Abe And Kuroda Emerges Over Difference In Fiscal Policy
Kuroda has been the Governor of the central bank for two years, and the differences between him and the Prime Minister that are arising could affect the monetary easing and money-printing program that he devised.
Two years into Bank of Japan Governor Haruhiko Kuroda’s tenure, the cracks are becoming hard to conceal and could affect the timing of any further monetary easing and an eventual end to the massive money-printing program he set in train. They both fought the deflation together, but the shocking public debt of Japan has reached 230% of Gross Domestic Product, which is double the debt of US and over 50 point above the public debt of unstable Greece.
Abes last year decision to delay the sales tax raise, led to the difficulties with Japans primary fiscal goal. Totan Research chief economist, Izuru Kato, thinks that this affected the relations of the two figures. “Kuroda must be frustrated over a lack of progress in structural reform and fiscal consolidation.” Kuroda is certain that no tax raises can be delayed, but the Prime Minister is keen to elevate tax revenues, by helping growth.
The speech against proposals of Economics Minister, Akira Amari, who is very close to Abe, that Kuroda gave last month, in from of the Prime Minister raised concerns in the Japanese Government. After that, Kuroda stated that the primary balance target is essential, and that it is a first step of “gradually reducing the debt-to-GDO ratio.”
Kuroda gave Abe a massive burst in stimulus, which raised profits and enhanced consumers’ sentiment, in the beginning of 2013. Now, he is concerned that the enormous public debt will affect the sovereign debt ratings, boost bond holdings and bloat BOJ balance sheet.