JANUARYASIA BUSINESS OUTLOOK8NEWSROOMINDONESIA TO ISSUE CARBON CREDIT CERTIFICATES TO INTERNATIONAL BUYERSJapan faces the urgent burden of repairing its damaged public finances while dealing with the industrial world's worst public debt, which is more than double the size of its economy. This becomes more critical as the central bank reduces its decade-long, ultra-loose monetary policy, which has maintained borrowing costs near zero.Japan's goal of achieving a primary budget surplus for the first time in decades will be delayed by a year, according to a government projection, as pressures for more spending weigh on the state budget this year.Prime Minister Shigeru Ishiba's minority government is facing a number of demands from opposition parties that could inflate the budget, so the prediction, which was made at a meeting of the government's top economic council, may be postponed once more.One important indicator of how much policy can be supported without taking on debt is the primary budget balance, which does not include debt-servicing expenses or fresh bond sales. After repeatedly postponing the target, the government last year reiterated its promise to deliver a surplus by the fiscal year 2025 beginning in April in its annual economic and fiscal policy guidelines. However, because of an additional budget that was created late last year to protect households from growing living expenses, the primary balance for fiscal 2025 is now expected to be a deficit of 4.5 trillion yen rather than the 800 billion yen surplus that was previously projected.The administration intends to consider whether to establish a new target and include the results of the discussion in this year's fiscal and economic policy guidelines, which are expected to be published in June. Indonesia is set to launch carbon credit certificates for international buyers on Monday, January 20, as part of its effort to fund initiatives supporting its carbon neutrality goals. The move aims to leverage the country's status as an archipelago with the world's third-largest rainforest area, even as it remains one of the top 10 global greenhouse gas emitters. The certificates will be derived from emission reductions achieved by several power projects on Java island, accounting for 2.48 million metric tons of carbon dioxide equivalent (CO2e), according to the Ministry of Environment, as reported by state news agency Antara.Indonesia introduced carbon emission credit trading for domestic participants in September 2023, but the market has remained largely illiquid due to limited supply and demand. By the end of December 2024, the trading value had reached 50.64 billion rupiah (US$3.10 million), with a trading volume of 908,018 tons of CO2e, data from Indonesia's Financial Services Authority shows.Newly elected President Prabowo Subianto is focused on leveraging carbon offset sales as a means of raising funds. Last year, he expressed optimism about Indonesia achieving net zero emissions by 2050, a full decade earlier than previously targeted. Key measures include phasing out coal-fired power plants, alongside expanding carbon trading mechanisms to the international market. JAPAN'S DEBT CRISIS LOOMS AS CENTRAL BANK EASES MONETARY POLICY
< Page 7 | Page 9 >