The government plans to inject 3.8 trillion yen in state funds for a fiscal 2000 supplementary budget aimed both at ensuring economic recovery and avoiding issuing deficit-covering bonds to secure funds, government and ruling coalition sources said.

It will be the first time in four years that the government has not issued deficit-servicing bonds to compile a supplementary budget.

The government plans to partially finance the extra budget through 2 trillion yen in construction bond issues, with the remainder coming from surplus funds from the fiscal 1999 budget and from an increase in tax revenue from businesses that is expected as the economy recovers, they said Thursday.

The final size of the extra budget will be determined at a meeting of government leaders and senior officials from the ruling coalition slated for Wednesday, they said.

The government is expected to submit the supplementary budget to an extraordinary Diet session around Nov. 10.

Although some senior Liberal Democratic Party legislators have been calling for a much larger auxiliary budget, the government is concerned that excessive flotation of bonds might put upward pressure on interest rates if demand for them is insufficient, the sources said.

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