While the Finance Ministry's draft budget for 2002 features significant structural changes, its central reform pillar of limiting government spending has aggravated concerns about the economy.
Bound by Prime Minister Junichiro Koizumi's pledge to limit new bond issues to 30 trillion yen -- which he touts as the first step toward fiscal reform -- some economists say the draft budget lacks sufficient fiscal provisions to help prevent the economy from falling into a deflationary spiral.
"I believe this budget reflects Koizumi's reform policies to some extent, if we look at the budget's expenditure shift toward priority areas and drastic reviews on public corporations," said Nobuhiro Okuyama, chief economist at the Mitsubishi Research Institute. "The budget, however, is unlikely to sustain the economy for long."