Prime Minister Junichiro Koizumi said Tuesday he is considering compiling a second supplementary budget for this fiscal year, indicating the government has started discussions on its size and contents.

The budget "is being considered," Koizumi said at his official residence when asked by reporters if he felt positive about the issue. Another supplementary budget could force Koizumi to break his 30 trillion yen cap on fresh government bond issues -- the government's usual source of financing for economic stimulus.

Finance Minister Masajuro Shiokawa told a news conference that a second extra budget could be compiled but repeated his view that no new government bonds should be issued. He said a new extra budget should include economic reform steps.

Shiokawa was backed by Heizo Takenaka, the economic and fiscal policy minister. Takenaka said the budget "would be an important policy option if it promotes structural reform."

Koizumi emphasized that he has not yet made up his mind.

"I have not issued instructions" to Shiokawa to compile the extra budget, Koizumi said, without giving a timetable for the decision. Chief Cabinet Secretary Yasuo Fukuda hinted separately that Koizumi may make his decision by the end of the month.

Earlier in the day, Koizumi said he listened to Shiokawa's views on how a second budget would be financed and what to do about his 30 trillion yen bond cap.

The 3 trillion yen supplementary budget for fiscal 2001 enacted Friday has already brought the total for new government bond issues to the 30 trillion yen mark.

Shiokawa said the second extra budget, if compiled, should be financed by selling government assets and that the 30 trillion yen limit should be observed.

But the Council on Economic and Fiscal Policy, which Koizumi heads, was to discuss the need for a second budget in the evening, when Koizumi was to make a final decision, he said.

Shiokawa also met Monday morning with Mikio Aoki, leader of the LDP caucus in the House of Councilors, to exchange views on economic stimulus measures.

Aoki told Shiokawa that measures, including a second supplementary budget, are necessary, party officials said.

Aoki has said he sees no need to stick to the 30 trillion yen bond cap because the economic situation has changed since Koizumi first pledged it.

Shiokawa responded positively by saying, "I may have no choice," the officials said.