Heizo Takenaka, state minister in charge of economic and fiscal policy, continued to push fiscal stringency Thursday, calling Prime Minister Junichiro Koizumi's proposal to cap government bond issues below 30 trillion yen "extremely reasonable."
The remark comes at a time when concerns are growing over the future of the economy and banking system and amid revived calls for generous government spending to prop up the economy.
The government has so far pledged a 30 trillion yen cap for fiscal 2002. For this year, the Finance Ministry has projected that bond issues of between 33 trillion yen and 30 trillion yen would be necessary.
"What is necessary is to build a system that will bring out the innate potential of the nation and to strengthen the supply side (of the economy)," Takenaka said after a meeting of the Council on Economic and Fiscal Policy. "Large bond issues to raise demand bring many risks."
The council, a key government panel chaired by Koizumi, did not discuss a supplementary budget during the meeting, Takenaka said.
But the minister noted that bond issues could exceed 30 trillion yen, due to fluctuations in tax revenues.
During the meeting, ministers submitted a list of long-term initiatives for consideration as the council prepares a schedule by next week for pushing forward reforms.
The initiatives include the use of information technology in keeping track of medical records, increased transparency in land price assessment and enhancing educational programs at community colleges.
Stock prices fell to yet another postbubble low earlier the same day, exasperated by fears that the nations' banks will be unable to eliminate their worst loans as they deal with massive losses on the stock market.