Japan’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 Japan's tax revenues fall, creating a large void in its spending.
According to the research, before this 'rare arrangement,' Japan's finance ministry would typically 'tap the funds set aside as special accounts, and the earnings of the Bank of Japan (BOJ) and other agencies would revert to the state treasury after their annual books had been locked.'
However, the recession of this year has prompted the Ministry to step into an agreement concerning the BOJ as well. Explaining how the arrangement was made, the study says:
The department in charge of foreign relations sold a percentage of the dollar assets to the BOJ. With the yen it got, the division bought gold from another division of the Ministry responsible for debt management.
Meanwhile, the article mentions two unnamed individuals that announce that the Ministry's "debt management division earned revenues worth $4.84 billion (500 billion yen)" from the selling of gold.
Individuals add that these taxes would "finance a new fund aimed at boosting research and development in universities."
In the meantime, on the same day, the BOJ declared that it will "buy dollars from the Ministry as a precaution against any market disruption caused by the pandemic."
According to the experts interviewed, Japan may have turned to this strategy because it "wanted to avoid paying too much debt or using taxpayers' money for the fund."
