00:00Minister Katayama, thank you so much for joining us.
00:03There's deepening concern about surging yields in Japan,
00:07super long JGB yields at record levels,
00:1040-year yields at 4% for the first time ever.
00:15Can Japan continue to ignore the concerns of the market about its finances?
00:21I don't have any concerns about the absorption of JGBs going forward
00:26because we have a well-thought-out plan for JGB issuances.
00:30I believe the Ministry of Finance of Japan is perhaps the best Ministry of Finance in the world
00:35in terms of our close communication and careful communications with the market participants.
00:40Investors obviously disagree with the perception that you hold right now.
00:46They say that JGBs are not the ones to buy at this point in time.
00:50There are huge concerns about your finances.
00:53How do you respond to that when they say that perhaps Japan's bond market is a canary in a coal mine?
01:01I think those concerns are misplaced.
01:05We put a lot of importance on sustainability of our public finance.
01:09If you look at the draft budget for all this year,
01:12for the first time in 28 years, we will be achieving a primary balance surplus.
01:16If you look at our economic policies, through our economic policies,
01:21the plan is to expand the size of the Japanese economy.
01:24We have already seen an increase of tax revenue by 84 trillion yen,
01:29and we are to spend without additional borrowings.
01:32And as if you could look at our dependency on JGBs,
01:36the public debt dependency is at a 30-year low.
01:39As the Minister of Finance, I am not going to ignore the concerns in the market.
01:46The Prime Minister has been talking for the past couple days
01:49about an election to ask for the confidence of the public.
01:53She has talked about a possible plan for reducing the consumption tax rate.
01:57I know that is one of the reasons why the market has become rather nervous.
02:00But she has said that Japan is not going to depend on issuance of deficit-covering bonds.
02:05Since October of last year, we have taken a very responsible approach to public finance,
02:11talking about responsible, sustainable, and proactive fiscal policies.
02:16We are not taking expansionary fiscal policies.
02:19And this is demonstrated by some of the numbers that we see.
02:22So I ask the market participants to calm down.
02:26What concrete steps will you take to fund all the spending plans
02:31that have already been massive, significant stimulus?
02:34And now the Prime Minister has said she's cutting the consumption tax,
02:39which amounts to 8 percent.
02:40That leaves a huge hole, I suppose, in revenue.
02:47The Prime Minister is talking about reducing the consumption tax rate only for food items.
02:52Even with that, there will be quite an amount which will be required.
02:57But we have already reduced gasoline tax,
02:59and we have secured the financial resources every time we have decided on spending.
03:03We have explained it to the IMF as well.
03:06Just last week, I was in Washington, D.C. to attend the G7 and like-minded countries meeting.
03:11And we had a bilateral meeting with managing director, Madam Georgieva, of the IMF.
03:17And she knows that every time Japan takes an action,
03:20we have paid careful attention to fiscal sustainability,
03:23and we have been mindful of ensuring fiscal sustainability.
03:26We know that public debt dependency has been coming down,
03:30and she gives credit to that, and she fully appreciates that.
03:34This year, the fiscal deficit to the GDP of Japan will be the lowest among G7 countries,
03:40which is not widely known.
03:42And it is within this framework that the Prime Minister is talking about eliminating wasteful tax exemptions.
03:48The market's obviously still not confident about Japan's finances.
03:53We're seeing 30-year JGB yields higher than the bunds of the same tenure.
03:59Might you want to stabilize the bond market somewhat?
04:03Might you ask the BOJ to increase its scheduled bond purchases Wednesday morning,
04:09just to bring that stability to the market?
04:11Of course, we will work to restore the market confidence,
04:16and we have already been in communications with institutional investors.
04:20We have already been in communications with the BOJ.
04:23I wouldn't be attending this Davos meeting if there were something that we could officially announce.
04:28So you're willing to take concrete steps to bring stability to the Japanese bond market?
04:34I've been in the position of Ministry of Finance for four months now,
04:37and it might not be as much as you imagine, but I have taken concrete measures to bring stability to the market.
04:44What I can say is that we have done so, and I will continue to do so.
04:48Don't worry.
04:50How are you assessing the risk of contagion?
04:54We have seen treasuries getting impacted.
04:56We have seen the Australian bond market getting impacted.
05:00Might we see what's been deemed as the bond market meltdown in Japan impacting the rest of the world?
05:11The recent JGB auction went very successfully,
05:14and we have a well-thought-out future option of the JGBs,
05:18and we are confident the future upcoming auctions will be successful as well.
05:23I don't think it's right for me to talk about the potential impact.
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