Koizumi may break bond-cap pledge

Prime Minister Junichiro Koizumi exhibited a degree of flexibility Monday regarding his pledge to limit the issuance of government bonds to 30 trillion yen, apparently recoiling from previous adamant declarations that it would be enforced.

“The spirit of the 30 trillion yen cap is playing an important role in maintaining financial discipline,” Koizumi told a House of Representatives plenary session in the afternoon. “How can the economy recover if we draw up an extra budget with additional expenditures without carrying out structural reform?”

But the prime minister on this occasion stopped short of reiterating his resolve to “maintain” the ceiling.

He also said the government has no plans to submit an extra budget for fiscal 2002 during the current Diet session.

In the Lower House on Monday, Mitsuo Horiuchi, former trade and industry minister, urged the prime minister to draw up a supplementary budget focused upon stimulating individual consumption and corporate investment rather than on increasing public works projects, as has been the historical norm.

“In such a case, (Koizumi) should not stick to the 30 trillion yen cap,” Horiuchi, a senior member of Koizumi’s Liberal Democratic Party, told the session.

Meanwhile, Akihiro Ota of New Komeito, a junior partner in the LDP-led coalition, said that Koizumi would gain public understanding if the additional expenditures were to be used to tackle the deflation dogging the economy.

Yukio Hatoyama, leader of the Democratic Party of Japan, said Koizumi should step down if he breaks his 30 trillion yen pledge in drawing up an extra budget.

When asked to comment on the fact that calls to scrap the limit are coming from within the ruling bloc, Koizumi told reporters at the Prime Minister’s Official Residence later in the day that he would deal with the matter “in a bold, flexible manner.”