There is no possibility that an economic pump-priming package will be drawn up in the latter half of this fiscal year due to financial constraints, a top Finance Ministry official said Sept. 1.
Vice Finance Minister Takeshi Komura told a news conference that the nation's coffers had "no money whatsoever" to spare for measures such as tax cuts or extra public works spending. "Steps such as tax reductions require funds, and I do not think we should issue deficit-covering bonds and leave the tab for future generations to pick up," said the ministry's highest ranking bureaucrat.
The government aims to reduce its fiscal deficit to 3 percent or less of gross domestic product and terminate the issuing of deficit-covering bonds by fiscal 2003. Despite orders to cut policy-related outlays for fiscal 1998 by roughly 240 billion yen from the 1997 level, the budget is still expected to grow due to debt-servicing costs.
According to market participants, the fall in stock market prices and the yen's depreciation are stirring concerns over the economy's strength, but the government's opinion that the economy is continuing on a recovery course remains, Komura said. "While there has been a temporary slackening of the pace at which the economy is recovering due to the (April) consumption tax hike, we still believe the economy is showing signs of recovery led by the private sector," he said.
Japan will reiterate its confidence in the economy at a meeting of finance ministers and central bankers from the Group of Seven industrialized nations in Hong Kong later this month.