It will be difficult for the government to limit the issuance of new government bonds for fiscal 2007, Finance Minister Koji Omi said Thursday.
Omi was commenting on a newspaper report earlier in the day that said Prime Minister Shinzo Abe will soon instruct the government and ruling coalition to cut the issuance of new government bonds for fiscal 2007 to 27 trillion yen, down from the 29.97 trillion yen planned for fiscal 2006.
Omi said he has not received any specific instructions from Abe on the matter, adding that the Finance Ministry has yet to discuss details of a numerical government bond issuance target for the fiscal year starting next April.
Chief Cabinet Secretary Yasuhisa Shiozaki meanwhile said the government has not decided on a specific figure.
“The basic policy is that (new issues) will not exceed the value of bond issuance in the current fiscal year,” the top government spokesman said.
Abe has pledged to hold new bond issues below 30 trillion yen — the target initially set by his predecessor, Junichiro Koizumi.
The government’s initial budget for fiscal 2006 called for new bond issues totaling 29.973 trillion yen, down 12.8 percent from the previous year’s initial budget, falling below 30 trillion yen for the first time in five years.
The newspaper report said Abe has decided to further cut new bonds to around 27 trillion yen in order to cut the budget deficit by more than Koizumi, on the strength of rising tax revenues and further cuts in expenditure.
Omi said the Finance Ministry will further promote fiscal reform and try to hold strictly to the budget for fiscal 2007, based on plans to cap core policy-related outlays at 46.8 trillion yen, which would be the lowest level in nine years.
Omi declined comment on whether the ministry will use expected increases in tax revenue to limit bond issuance or to cover revenue shortfalls expected from planned tax cuts.
The ministry is scheduled to finalize the budget for the next fiscal year in late December.
Japan has the highest ratio of debt to gross domestic product of any major developed country.
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