Finance Minister Hiroshi Mitsuzuka said Jan. 8 that authorities will closely monitor movements in the Tokyo Stock Exchange, where the key Nikkei index closed below the 19,000 mark for the second straight day.Concern over the future of the nation’s economy was one reason behind the continued slide of the Nikkei average of 225 blue chip stocks, he acknowledged, but he pointed out that many analysts and businesspeople are confident economic recovery will continue. “The fact that stock prices continue to drop indicates that we must continue to watch (the stock market) closely,” he told a news conference.He brushed aside arguments that the government’s decision to terminate special cuts in income and resident taxes as of the end of last year was one of the causes of the bearish tone of the market. The decision “was the right one” because continuing the tax breaks would have forced the government to issue more deficit-covering bonds, further worsening the nation’s fiscal situation, he said.Mitsuzuka added that he remains confident the economy will grow by 1.9 percent in fiscal 1997, as the government is projecting. He also said that the private sector should make greater efforts to act as the locomotive for economic growth.In an effort to help the nation regain its fiscal health, Mitsuzuka said a bill that would set numerical targets for cuts in government spending should be submitted to the Diet, which begins a regular session later this month. The need for Japan to make greater efforts to reduce its fiscal deficit, as its counterparts in the industrialized world are doing, is important, he stressed.The government has already set a target for terminating the issue of deficit-covering bonds and bringing the total fiscal deficit of the central and local governments to less than 3 percent of gross domestic product by 2005.
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