BOJ’s Faster ETF Sales May Help Takaichi’s Spending Plan

The Bank of Japan’s decision to accelerate sales of exchange-traded funds could boost its payments to the government, potentially helping Prime Minister Sanae Takaichi finance her costly policy agenda.

The central bank announced Friday that it would increase its annual ETF sales to ¥860 billion ($5.5 billion) on a book-value basis from January, up from the current ¥330 billion. The faster pace would shorten the estimated time needed to complete the sales to about 43 years from 112 years.

The BOJ is required by law to remit its surplus earnings to the government after deducting dividends and other expenses. Gains from ETF sales could increase those payments, providing additional non-tax revenue for the government.

“Accelerating ETF sales will naturally increase capital gains and, in turn, the BOJ’s surplus earnings,” Finance Minister Satsuki Katayama told reporters Friday evening. “We therefore expect payments to the government to rise compared with the previous sales pace.”

She said the government would consider how to use the additional revenue during the upcoming budget process.

The faster sales would generate about ¥800 billion in additional annual revenue for the BOJ, according to an estimate by Taro Kimura, a senior economist at Bloomberg Economics.

See more: Strong But Concentrated Economic Growth