Japan has sold 80 tons of gold used for minting coins to another arm of the government in order to fund part of its huge stimulus package to combat the coronavirus crisis, government officials told Reuters.
Japan's finance ministry is under pressure this year to find non-tax revenues to cover the rising cost of dealing with the health crisis while holding public debt twice the size of its economy. The pandemic-induced recession has hurt its tax revenues.
The ministry usually meets shortcomings from tax revenues by tapping into reserves set aside as special accounts and profits the Bank of Japan and other agencies return to state coffers after they close their annual books.
However, this year, it resorted to a rare arrangement involving the central bank of the country.
According to the Reuters report, the ministry's division in charge of international affairs sold a portion of dollar reserves to the Bank of Japan. With the yen it received, the division bought gold from another division of the ministry that is in charge of debt management.
The division in charge of debt management gained 500 billion yen ($4.84 billion) from the gold sale that will be used to finance a new fund aimed at boosting research and development at universities, two officials told Reuters on condition of anonymity.
On Wednesday, the Bank of Japan announced that it would buy dollars from the ministry as a precaution against any market disruptions caused by the pandemic. However, the Reuters report said that the arrangement may have been initiated by the finance ministry and not the central bank as it looks to avoid high debt or use taxpayers' money for the fund.
A government official told the international news agency that the budget allocation for the university fund was a consequence, not the key purpose, of the arrangement while another official called BOJ's dollar funding an exceptional move.