Japan will avoid new debt issuance to finance tax cuts, relying instead on reserves and spending reforms, Prime Minister Sanae Takaichi stated.
Japan’s Prime Minister Sanae Takaichi announced the government will not issue debt to fund temporary tax cuts, aiming to preserve market trust. The move follows plans to reduce the sales tax on food to 1% from April 2027, later restoring it to 8% after two years.
Takaichi indicated alternative revenue sources, including foreign reserves, non-tax income, and spending reforms, will be explored. The decision contrasts with past fiscal measures that relied on bond issuance to stimulate the economy.
No immediate market reaction was reported following the remarks, which were made during the European trading session.