The Abe administration plans to extend temporary legislation allowing the government to automatically issue debt to fund the annual budget without Diet approval, sources said Monday.
The special law, approved in fiscal 2012 and scheduled to expire this fiscal year, will be extended by three to five years to make sure government spending doesn't get cut off due to a political standoff, the sources said.
By considering going as long as five years, the administration is taking into account its goal of achieving fiscal reform in fiscal 2020, but there is concern an extension that long could undermine the government's fiscal discipline.
The administration will decide the extension's length before submitting a bill to the Diet during the legislative session that starts in January, the sources said.
By law, the government is only allowed to issue construction bonds to finance public works.
Dealing with a significant shortage of tax revenue, however, the Diet passed a special law every year until fiscal 2011 to enable the government to issue deficit-covering bonds for other purposes once the annual budget is enacted.
Political conflict caused by a divided Diet prevented enactment of the law for fiscal 2012, prompting the administration led by Prime Minister Yoshihiko Noda to compile a bill to approve debt-financing bonds from fiscal 2012 through fiscal 2015.
Though both Diet chambers are now controlled by the Liberal Democratic Party and Komeito, the administration has judged it necessary to extend the law for a significant length of time to avoid any contingency of the government running short of funds.
The administration has promised the international community it will bring government finances into the black by fiscal 2020, as Japan's fiscal health is the worst among major industrialized economies. The national debt is more than 200 percent of nominal gross domestic product.