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Japan curbed bond issuance last fiscal year even as pandemic hit tax revenue

TOKYO, July 3 (Reuters) – Japan’s government’s bond issuance was 500 billion yen less than earlier planned in the fiscal year that ended on March 31, the Ministry of Finance said on Friday, after closing the books on the 2019/20 fiscal year.

The below-planned issuance was achieved despite national tax revenues undershooting government estimates for the first time in two years, as a result of the coronavirus health scare that hit Japan in February, denting corporate and sales tax revenues.

Finance ministry officials said the reduced issuance showed the government’s determination to curb borrowing while at the same time spending heavily to help pull the economy through the slump caused by the pandemic.

Despite falling tax receipts, the government ended the last fiscal year with 690 billion yen ($6.42 billion) leftover, the ministry said, confirming a Reuters report issued on Thursday.

The decline in tax receipts was offset by rises in non-tax revenue — including a payment into the state coffers by the Bank of Japan — and unused money arising from lower-than-estimated borrowing costs.

Under Japan’s budget rules, half of the surplus cash must be spent to pay off debt, while the rest could be allocated to an extra budget if one is compiled later this year.

The government has revised down fiscal 2019/20 tax revenue to 58.4 trillion yen, from a near-record 60.2 trillion yen that had been estimated in December.

($1 = 107.4900 yen) (Reporting by Tetsushi Kajimoto; Editing by Simon Cameron-Moore)

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