Prime Minister Junichiro Koizumi suggested Thursday that he is ready to withdraw his policy goal of limiting the current fiscal year's net bond issues to within 30 trillion yen.

"In a bold and flexible manner, we must take measures that can forestall unwanted turbulence in cases where unexpected confusion breaks out in security or economic policy fronts," Koizumi told the House of Representatives Budget Committee.

Koizumi was referring to the Sept. 11 attacks on the World Trade Center and the Pentagon that have pounded U.S. consumer spending, the aviation and insurance industries and global share prices. "The terror attacks have led the global economy to develop signs of sinking into recession simultaneously in various parts of the world, so Japan could play an important role in the economic front," he said.

With the economy continuing over the past several months to develop signs of a shrinkage in fiscal 2001, Koizumi has repeatedly described the 30 trillion yen cap as a "goal" he wants to see achieved but which may require abandoning.

When Koizumi formed his Cabinet in April, he pledged to limit the net amount of government bond issues for fiscal 2002 to less than 30 trillion yen as part of efforts to put Japan's deficit-ridden fiscal house back in order.

But later in the course of his five-month administration, he repeatedly said he will also apply the austerity goal to the planned amount of bond issues for the current fiscal year through March 31.

The economic deterioration since the summer and the Sept. 11 attacks have apparently forced a change in his rhetoric. He has cautioned that his economic policy will be "bold and at the same time flexible" depending on the economic situation.

As a series of recent economic indexes testify to the likelihood of Japan's economy shrinking in fiscal 2001, senior government officials have expressed readiness to surpass the 30 trillion yen goal by compiling a large supplementary budget.

On Monday, a key Bank of Japan quarterly survey showed that the business confidence index for large manufacturers plummeted to minus 33 in September, nearing an all-time low of minus 51 set in December 1998.

The diffusion index is computed by subtracting the percentage of companies that say their business conditions are bad from that of firms reporting favorable conditions.

In the fiscal 2000 budget, Japan floated a total of 88 trillion yen of bonds, including 53 trillion yen of "refinancing bonds," which are issued to pay for government debts springing from past bond issues. The 35 trillion yen difference is the sum of net bond issues for the year.

For fiscal 2001, the government said it plans to limit the net issue amount to 28.3 trillion yen in the framework of the regular budget, leaving only marginal room for upcoming bond issues to finance a supplementary budget.