By Leika Kihara and Tamiyuki Kihara
TOKYO, May 28 (Reuters) – Japan plans to issue “bridging bonds” to fund the administration’s flagship programmes aimed at boosting investment in growth and economic security areas, the Nikkei newspaper reported on Thursday.
Bridging bonds are used to cover temporary funding needs and issued with guarantees on specific means to pay for redemption.
The idea was included in a proposal the ruling Liberal Democratic Party will submit to the government on Thursday, according to the draft obtained by Reuters.
The government should create a new investment framework, some of which can be funded by bridging bonds, the draft LDP proposal stated.
The government will consider including the idea of issuing bridging bonds in its medium-term fiscal blueprint, due in July, the Nikkei said.
The prime minister’s office was not immediately available to comment.
Prime Minister Sanae Takaichi has laid out 17 strategic areas she will target in expanding domestic investment, which will involve several years of government involvement.
The key was how to fund the programmes with Japan’s huge public debt and the premier’s expansionary fiscal policy already keeping markets jittery over the country’s worsening finances.
Since they are issued for temporary funding, bridging bonds would be excluded from the government’s calculation of Japan’s fiscal measurements such as its debt-to-gross domestic product ratio.
(Reporting by Leika Kihara and Tamiyuki Kihara; Editing by Lincoln Feast.)
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