Finance Minister Kiichi Miyazawa on Friday called for swift passage of the 84.99 trillion yen fiscal 2000 state budget in an attempt to achieve a full economic recovery. In a fiscal policy speech before the House of Representatives plenary session, Miyazawa said the worst is over for the economy thanks to various stimulus measures the government has taken. But since the economic condition is still fragile, Miyazawa said, the government needs to continue its free-spending ways until private demand can replace public stimulus as a major economic force. At that point, he said, a full-fledged economic recovery will be in place. But the stimulus effort is showing signs of stress. Nearly 40 percent of the budget must be financed by bond issues -- to the tune of 32.61 trillion yen. This will bring the outstanding government bonds to an estimated 364 trillion yen at the end of March 2001. Miyazawa touched on the balancing act the enormous debt burden is forcing the government to perform. "It will not be easy to improve the critical fiscal situation and at the same time cope with various problems for the new century," he said. The fiscal 2000 budget is the largest ever and 3.8 percent more than the initial fiscal 1999 figure of 81.86 trillion yen. While the latest budget features fresh funds of 120.6 billion yen to promote technological innovation in key areas, the 9.93 trillion yen earmarked for public works spending -- including reserves for unspecified projects -- is the biggest element meant to stimulate the economy. The budget also includes 4.5 trillion yen in debt-servicing to expand the fund to handle bank failures. Miyazawa said, "I believe that all necessary measures for economic recovery and stabilization of the financial system are included in this budget." Referring to a statement issued Jan. 22 by the Group of Seven industrial countries, he said a public-spending induced recovery will help achieve a "more balanced pattern of growth" by the G-7 countries. Recovery anticipated> The government will promote efforts to achieve a full economic recovery led by domestic demand in fiscal 2000, with a further push for structural reform of the economy, Economic Planning Agency chief Taichi Sakaiya said Friday. "We are aiming to achieve a full-scale economic recovery led by domestic demand in the latter half of the fiscal year," Sakaiya said in a policy speech to the 147th regular Diet session. He said the government will try to achieve that goal by "removing people's anxieties over employment and boosting consumption through a variety of measures as well as by boosting activities of new businesses." Sakaiya said the economy has been improving but it has not yet achieved a self-sustaining recovery, and added the budget for fiscal 2000, which starts April 1, will help promote just that. He warned, however, against complacency and emphasized the importance of promoting structural reforms and developing creative ideas that will put the economy back on the path to long-term prosperity. Further digitization, including the expansion of capacity for information networks and the establishment of a framework for electronic commerce, will be essential to promote structural reform of the economy, he said. Sakaiya stressed the importance of restoring the nation's fiscal health, but said Japan's priority should be placed on achieving economic recovery. "Healthier national finances cannot be expected without a healthy economy," Sakaiya said. As a result of a series of pump-priming packages intended to lift the economy out of its prolonged slump, Japan's fiscal situation has been deteriorating with huge budget deficits. Turning to the external economy, Sakaiya said it is a priority for Japan to strive to boost the multilateral trade system and strengthen cooperation with other Asian economies. Japan will continue to contribute to sustainable growth in the global economy, he said, noting such growth is indispensable for Japan's economic prosperity. Japan will make efforts for an early launch of a new global trade round under the World Trade Organization because maintaining and strengthening the multilateral trade system is important for the world economy, he said. Sakaiya said Japan will play an active role in further strengthening cooperation in Asia by utilizing institutions such as the Asia-Pacific Economic Cooperation forum. He also said Japan will continue to cooperate on economic development and reform of other Asian economies through such vehicles as official development assistance.
