Japan's Katayama signals hope of bigger surplus from central bank's ETF sales

TOKYO, Oct 30 : Japanese Finance Minister Satsuki Katayama said on Friday it was "obvious" that the central bank's decision to speed up sales of its exchange-traded funds (ETF) holdings would boost surplus payments to the government.

The remarks came as Prime Minister Sanae Takaichi's administration scrambles for non-tax revenues to finance its huge spending plans without relying too heavily on additional debt issuance.

The BOJ decided on Friday to hasten annual sales of ETFs from January to 860 billion yen ($5.46 billion) from 330 billion now. A portion of net profit the central bank reaps each year, including from the ETF sales, is paid to state coffers.

In a statement, the BOJ said the decision was made after it saw the current pace of sales as causing little disruption to the market.

Asked about the decision, Katayama said the government respected it.

"It's obvious the faster pace of ETF sales would generate higher profits and boost net surplus," which in turn will increase the amount the BOJ pays to state coffers, he told reporters.

"The government will consider how much additional revenue could be expected, and how any such increase should be treated, as it drafts the budget" for next fiscal year, Katayama added.

The BOJ began unloading its ETF holdings in January as part of efforts to phase out a massive stimulus programme aimed at reflating growth and firing up inflation to its 2 per cent target.

The sales kicked off on a scale that would cause minimum damage to markets. Even with the faster pace from January, the BOJ would take about 43 years to disperse its holdings, it said on Friday.

As rising stock prices inflate the value of ETFs, some lawmakers have called for proceeds from the BOJ's ETF holdings to go towards funding tax cuts and spending plans.

($1=157.5300 yen)