The outstanding balance of government bonds will reach 67.7 percent of gross domestic product in fiscal 2005 if the government fails to carry out structural reforms and continues to issue bonds to make up for all revenue shortfalls, the Finance Ministry warned Jan. 24.In its midterm fiscal outlook submitted to the Lower House Budget Committee, the ministry calculated that in such a case, as much as 27.7 percent of the fiscal 2005 state budget must depend on bond issues, up sharply from 21.6 percent for fiscal 1997. At the same time, the calculations show that if reforms are carried out and the government works to achieve its goal of stopping the issue of deficit-covering bonds by 2005, the government’s outstanding debt will be reduced to 46.2 percent of GDP.The nation’s fiscal disarray is one of the worst in the industrialized world. It has come to be largely due to the massive issue of government bonds over the past years to help fund economic stimulus packages.Alarmed at the rapid deterioration of the state coffers, the government declared last year that it will begin to tackle the fiscal debt problem in earnest, with Prime Minister Ryutaro Hashimoto setting fiscal reconsolidation as one of his top priorities.

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