The government plans to issue nearly 6.8 trillion yen in deficit-covering bonds in fiscal 1998 to finance a package of tax cuts aimed at boosting the economy and stabilizing the financial system, according to Finance Ministry sources. The bond flotation is nearly 750 billion yen smaller than that for the current year, but the cut falls short of the original reduction target by more than 50 billion yen, the sources said Friday.
The move means the government has effectively scrapped its pledge to rebuild Japan’s deficit-ridden national finances by fiscal 2003 under the new fiscal reform law, analysts said. The law, enacted last month, calls for the government to stop issuing deficit-covering bonds by the end of fiscal 2003. The government had intended to curtail such bonds, to be floated in each of the coming six fiscal years, by 1.25 trillion yen.