Japanâ€™s finance ministry has reportedly leveraged 80 tons of gold to help fund part of its huge stimulus package aimed at combating the coronavirus crisis. The Asian country, which is saddled with public debt twice the size of its economy, is under pressure to find non-tax revenues to cover the rising cost of spending to deal with the health crisis.
The Covid-19-induced recession has seen Japanâ€™s tax revenues drop, leaving a significant hole in its budget. According to a report, before this â€œrare arrangement,â€ Japanâ€™s finance ministry would normally â€œtap reserves set aside as special accounts, and profits the Bank of Japan (BOJ) and other agencies return to state coffers after they close their annual books.â€
However, this yearâ€™s recession has forced the ministry to enter into an arrangement that involves the BOJ as well. Explaining how the deal was carried out, the report says:
Meanwhile, the report quotes two anonymous individuals who reveal that from the gold sale, the ministryâ€™s â€œdivision in charge of debt management gained proceeds worth $4.84 billion (500 billion yen).â€ The individuals add that these proceeds will â€œfinance a new fund aimed at boosting research and development at universities.â€
In the meantime, the BOJ announced on the same day that â€œit would buy dollars from the ministry as a precaution against any market disruptions caused by the pandemic.â€ According to the analysts interviewed, Japan may have resorted to this approach because it â€œwanted to avoid issuing too much debt or using taxpayersâ€™ money for the fund.â€
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