An advisory panel to the finance minister urged the government Monday to stick to its belt-tightening policy to restore the government's debt-ridden finances as it compiles the budget for fiscal 2008.
The report, submitted to Finance Minister Fukushiro Nukaga, says the panel is not optimistic about the government's efforts to cut spending — reflecting widespread concern that fiscal reforms could take a back seat in the wake of the ruling bloc's election defeat in July.
To accelerate fiscal reconstruction, the report says the government needs to do all it can to cut spending and hold full-fledged debate on an overhaul of the tax system — including a hike in the consumption tax — to secure stable revenue to cover swelling social security costs.