Shockwaves are spreading in the Finance Ministry over the revelation that alterations were made to documents approving the sale of government-owned land to Moritomo Gakuen. This is because with its loss of credibility, the ministry’s influence over the Abe cabinet may weaken further. There are concerns in the financial markets that if the issue drags on, it may result in stagnation in the Abenomics policies, which have so far brought about a rise in stock prices and depreciation of the yen.

This scandal may affect the implementation of the Finance Ministry’s policies. There is concern, in particular, about the impact on the consumption tax increase slated for October 2019. A ministry official expressed alarm by saying: “The Finance Ministry will have to explain the need to increase taxes to the people for the sake of fiscal restructuring, but will they listen under the present situation?”

If the Abe cabinet’s ability to execute policies is weakened by this scandal, foreign investors, who have being buying Japanese stocks based on their positive assessment of Abenomics, may shift their position. (Abridged)