The shortfall in tax revenue will be worse than expected for the current fiscal year, Finance Minister Masajuro Shiokawa said Friday, without clarifying whether additional government bonds will be issued to make up the shortfall.
Shiokawa also did not mention how large he believes the shortfall will be, however.
“We believe that a revenue shortage will occur on a scale that is beyond our expectations,” Shiokawa told a regular news conference. “We have no choice but to make up for the shortfall.”
Tax revenues had been targeted at 46.82 trillion yen.
Drawing up an extra budget would probably force Prime Minister Junichiro Koizumi to break his pledge to limit the issuance of fresh government bonds to 30 trillion yen for the current fiscal year, a vow he made saying it would help rein in the government’s mammoth debt.
Shiokawa suggested the government should strictly review the fiscal 2002 budget to sort out projects that could be canceled.
Unused budgetary funds should not be simply carried over to the next fiscal year, he added.
Usually, when government ministries and agencies end up with unused budget funds due to such reasons as delays in public works projects, the funds are carried over to the next year.
In another matter, Shiokawa suggested that the Bank of Japan further ease its monetary stance toward the end of the year and early next year to fight deflationary pressure from the accelerated disposal of nonperforming loans held by banks.
The government earlier this week announced a program aimed at encouraging the nation’s major banks to speed up reduction of their bad loans.
A radical disposal of bad loans could drive ailing corporate borrowers into bankruptcy.
The BOJ has already lowered short-term interest rates to zero.
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