Japan PM Negative About Gov't Bonds to Finance Hike in Defense Spending

Japanese Prime Minister Fumio Kishida on Saturday dismissed the idea of issuing government bonds to realize a substantial increase in defense spending in the coming years, adding he will seek public support for his plan to rely instead on tax increases.

The tax hike plan has already met opposition even from Kishida's party lawmakers, although he wants the ruling coalition to work out its details before the end of the year, which coincides with a review of key security and defense documents, Kyodo News said.

Kishida has set a target of 43 trillion yen ($315 billion) in defense spending over the next five years until fiscal 2027, marking a sharp rise, as policymakers say they need to address increasing security challenges posed by China, North Korea and Russia.

Despite pushing for what he described as "a major shift" in both security and fiscal policies, Kishida told a press conference to mark the end of a 69-day extraordinary parliamentary session that he does not intend to dissolve the house of representatives soon for a snap election to seek a fresh mandate.

"We will strengthen our defense over the next five years, and it should be maintained and further strengthened in the years to come after that," Kishida told the press conference.

"To do this, stable funding sources are critical. In this respect, (issuing) government bonds is not an option when we think about our responsibility for the future generations," he added.

For a nation whose outstanding debt is more than twice the size of its economy, the 43 trillion yen target is a drastic increase from the roughly 27.47 trillion yen under the existing plan for the five years from fiscal 2019.

Kishida reiterated that the government will not raise income taxes to finance the planned hike in defense spending, adding that no taxes whatsoever will be increased in the next fiscal year from April.

The government is expected to update its key defense-related documents next week, paving the way for the compilation by yearend of a state budget for fiscal 2023.

"Raising taxes is not our objective. It's bolstering and maintaining the country's defense capabilities," Kishida said.