Prime Minister Yoshiro Mori indicated his qualified support Friday for a Liberal Democratic Party plan to allow construction bonds to be issued to fund outlays on projects other than public works.

"The trend of our age is changing, so there are conflicting views on the position of applying strict definitions to public works projects," Mori said.

His remarks came a day after an LDP panel commissioned with rethinking public works policy proposed amending the fiscal law to allow proceeds from issuing construction bonds to be used to fund projects unrelated to infrastructure construction.

Mori indicated, however, that he is aware of criticism that the proposed change could undercut the soundness of Japan's fiscal policy.

Discussion within the LDP has revolved around Article 4 of the fiscal law, which mandates that proceeds from construction bond issues be used to fund public works projects or for government lending to further the public interest.

Chief Cabinet Secretary Hidenao Nakagawa told reporters, "Although I would like to monitor developments in LDP discussions on this matter, it is worthy to note that they should discuss the matter cautiously from the standpoint of putting limits on unabated fiscal spending."

"No one in the government backs the position that the law should be amended speedily," Nakagawa said.

Finance Minister Kiichi Miyazawa said Friday that the principle of Article 4 of the Public Finance Law, which limits government borrowing, must not be changed.

The article stipulates that construction bonds may be issued to finance public works projects to construct national assets.

Miyazawa's remarks came in response to Thursday's agreement by the LDP's task force on public works to revise the article.

In a regular news conference, Miyazawa said he will first confirm the task force's intentions, adding that he had not talked to LDP policy chief Shizuka Kamei on the matter. Miyazawa, 80, himself is a veteran LDP member.

Hiromu Nonaka, LDP secretary general, was also cautious about the revision.

When it was originally set up, the LDP panel on public works projects did not have a mandate to propose such a revision, Nonaka said.

Economic Planning Agency chief Taichi Sakaiya, however, supported the plan.

"It is not a bad idea to flexibly use proceeds from construction bond issuance to diversify into items related to future-oriented projects," Sakaiya told reporters.

"This is not the age when we should preoccupy ourselves only with building roads, bridges and river-related projects," he said.

But Sakiya also said stipulations must be placed on the spending areas.

"Should they use the proceeds for IT (information technology) fields, the government would end up losing control of the limits for appropriation fields, unless we first define what fields would qualify as IT-related areas," he said.

Meanwhile, International Trade and Industry Minister Takeo Hiranuma also welcomed the idea, stressing that it would provide momentum for rapid investment in information technology-related projects.

"As a deputy chief of the state IT (Information and Technology) Strategy Council, I welcome such an idea (as expanding the use of construction bonds)," Hiranuma told a press conference Friday.

Expecting IT to fuel the future economy, the MITI chief said IT-related expenditures such as laying optical fiber cables along sewers, as well as conventional public works projects, should be covered by construction bonds.