Hashimoto vows to slash deficits to 3% of GDP by 2005

Prime Minister Ryutaro Hashimoto expressed his resolve Jan. 20 to slash annual deficits incurred by the central and local governments to a maximum 3 percent of gross domestic product by fiscal 2005.For the first time in the Diet, the prime minister specified a numerical target for reducing the nation’s fiscal debt, which is said to be the worst among major industrialized countries. The deficit now stands at around 7 percent of GDP.In a 40-minute policy speech delivered at the opening of the Diet’s 150-day regular session, Hashimoto also touched on the need to reform the nation’s education system while he pledged to aggressively push reforms in five areas already publicized, including reform of administration, the fiscal system, the financial system, the social security system and the economic structure. The target for cuts in fiscal deficits spelled out by Hashimoto falls in line with an agreement approved by the Cabinet late last month.Accumulated fiscal debt incurred by both state and local governments is estimated to reach 442 trillion yen by the end of March. The annual deficit stood at 7.4 percent in 1996, according to the Organization for Economic Cooperation and Development.Hashimoto said the government will try to end its reliance on debt-financing bonds as well as on government bonds to help finance spending. To ensure successful fiscal reform, the government, as well as Hashimoto’s ruling Liberal Democratic Party and its two allies, will wrap up the necessary measures as early as possible through the establishment of the Conference on Fiscal Structural Reform, according to the prime minister. The council’s first meeting is scheduled to be held Jan. 21.