The fiscal 2008 draft budget unveiled Thursday by the Finance Ministry has prompted many economists to wonder whether the government's fiscal reconstruction goal will ever be achieved.
Under the proposed budget, government spending will increase 0.2 percent to ¥83.06 trillion, marking the second straight yearly rise. The government, however, managed to limit new bond issuances to ¥25.35 trillion, slightly down from the current year's ¥25.43 trillion.
"The proposal demonstrates the government's desire to achieve fiscal reconstruction (through cutting new bond issuances), but the pace is very slow," said Shinichiro Kobayashi, a senior economist at Mitsubishi UFJ Research and Consulting Co. "The outlook for fiscal reconstruction is becoming uncertain."