The Finance Ministry will cut the issuance of new government bonds for fiscal 2005 to less than the 36.6 trillion yen planned for the current fiscal year, Finance Minister Sadakazu Tanigaki said Tuesday.
Tanigaki said Prime Minister Junichiro Koizumi has endorsed the plan, marking the first decline in bond issuance in four years.
"It is important to hold down bond issuance as much as possible for fiscal restraint," Koizumi said. "The economy has finally come onto a recovery tack and bond issuance should be reduced as much as possible.
"We will try to reduce it in the next fiscal year from this fiscal year even if only slightly."
Tanigaki said a cut in the issuance of government bonds will be "an opportunity to reverse the trend" of widening fiscal deficits.
He cited an expected rise in tax revenue, which would provide greater budgetary flexibility.
The ministry intends to curb the issuance of government bonds by cutting subsidies and tax allocations to local governments as well as nursing care and other social security expenses.
It also plans to abolish or reduce tax cuts introduced in 1999 to prop up a weakening economy. This measure is expected to increase national tax revenue by 2.5 trillion yen.