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BOJ chief says Japan's fiscal health in 'very serious' state

Bank of Japan Governor Haruhiko Kuroda meets the press at the central bank's head office in Tokyo on Oct. 29, 2020. ((Mainichi)

TOKYO (Kyodo) -- Bank of Japan Governor Haruhiko Kuroda said Tuesday the state of Japan's fiscal health is "very serious" but denied the central bank is financing the government's budget with its massive purchases of government bonds.

    "I personally think Japan's fiscal situation is very serious," Kuroda, who has rarely commented on fiscal conditions, said during a parliamentary committee session, at a time when the government is relying on massive bond issuances to finance stimulus measures and support the pandemic-hit economy.

    In fiscal 2021 starting in April, the government plans to issue 236.01 trillion yen ($2.3 trillion) worth of bonds, up 82.55 trillion yen from the initial plan for the current year, due to the fallout from the novel coronavirus pandemic, the Finance Ministry said in December.

    Kuroda said the central bank is buying government bonds not as a way to finance fiscal policies but as part of its ultraeasy monetary policy to achieve its 2 percent inflation target.

    On Tuesday, he admitted that monetary policies have not been entirely effective in achieving an intended level of inflation after the BOJ adopted inflation targeting in January 2013.

    "I feel responsible for not having been able to achieve" the central bank's inflation goal so far, he said.

    The BOJ decided in April to scrap its annual ceiling of 80 trillion yen for its government bond holdings as part of measures to strengthen monetary easing in response to the coronavirus pandemic, allowing itself to buy bonds for an unlimited amount.

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