Support for bond-cap disappearing

Top policymakers of the three coalition parties said Sunday the government should drop its 30 trillion yen cap on fresh bond issuance from an extra fiscal 2002 budget to bolster the economy.

Their comments on a TV talk show came after Prime Minister Junichiro Koizumi indicated last week that he may forgo the cap while seeking to compile and submit an extra budget to an ordinary Diet session that starts in January.

“The 30 trillion yen cap certainly can’t be maintained should tax revenues fall by the same scale as in the previous fiscal year,” said Fumio Kyuma, acting chairman of the Liberal Democratic Party Policy Research Council.

The government “should not stick to that figure,” top New Komeito policymaker Kazuo Kitagawa said on the same show. “Issuing bonds is inevitable.”

The New Conservative Party’s Kiichi Inoue said the 30 trillion yen ceiling “should be changed if fiscal and economic preconditions change sharply.”

As for the proposed extra budget, Kitagawa stressed the need to earmark spending to speed the implementation of social infrastructure projects that are consistent with the government’s economic restructuring efforts.

Both Inoue and Kyuma urged the government to consider using public works to stimulate private demand, arguing such projects can be financed with the fiscal loan-and-investment program.

They were apparently referring to opposition within the government, which advocates the more conventional method of boosting public-works projects to prop up the economy.