Prime Minister Sanae Takaichi said on the 6th that profits from the Bank of Japan's sales of exchange-traded funds could be used to repay "bridging bonds" (tsunagi kokusai) issued to fund economic security measures under the government's new investment framework. She was answering a question from Ken Tanaka of the Democratic Party for the People in the House of Representatives Financial Affairs Committee.
"The additional sale profits are truly the fruit of Japan's growth," Takaichi said. "I believe it is appropriate to use them for crisis-management investment, growth investment and economic investment, to connect that to further growth and realize a positive economic cycle."
The BOJ said on October 30 that from January 2027 it will sell its ETF holdings at a pace of about ¥860 billion a year, up from roughly ¥330 billion now. At the current pace, selling off the holdings would take about 112 years; the faster schedule cuts that to about 43 years. The profits are paid into the national treasury and used in the government's budget compilation, so the quicker sales were seen as a boost to the government's fiscal planning.
A new spending frame
Takaichi's government has created a "Strong and Prosperous Japan" investment framework that sets no ceiling on the budget requests ministries and agencies may submit for measures meant to spur growth. For policies tied to economic security in particular, it planned to issue bridging bonds, managed through a special account, on the premise that repayment sources are secured.
Using the ETF sale profits for that repayment would "raise the predictability of investment by committing to planned public support, and draw in private investment," the prime minister said.
In her answer she also touched on the roughly ¥5 trillion a year that has been cited as needed to fund a consumption tax cut on food and drink and income-linked benefits. She said the government would consider the matter "while giving concrete shape to the overall picture of the budget compilation reform we will pursue," and that the money would be found through higher-than-expected tax revenue and a review of funds.