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Fresh economic stimulus measures must not contradict the government’s resolve for fiscal restoration, Finance Minister Yoshihiko Noda said Friday, while indicating he is not considering new bond issuances to finance the strategy.

“This administration is tasked with both stimulating the economy and restoring (government) finances,” Noda said. “As for whether we need to issue new government bonds (for the stimulus measures), we should make a decision after closely watching the economic situation.”

Noda’s comments came after Kokumin Shinto (People’s New Party), the junior coalition partner of Prime Minister Naoto Kan’s Democratic Party of Japan, called on the administration to compile stimulus measures worth about ¥11 trillion and form a supplementary budget for fiscal 2010 to pay for them.

While the government has started preparations for its new round of emergency spending to address slowing growth and the yen’s recent surge in the currency market, Kan has ordered ministers to report on current economic conditions. A stronger yen has hurt the earnings of exporting companies.

Some officials said the government is considering using a reserve fund in the fiscal 2010 budget to finance the stimulus measures, which could involve helping new graduates find jobs and supporting smaller businesses hit by the yen’s strength.

But Kokumin Shinto, which submitted the request for massive stimulus measures to Chief Cabinet Secretary Yoshito Sengoku with New Party Nippon, a minor opposition force, claimed a stimulus package funded only by reserve money would be insufficient to boost the economy.

“Serious discussions will begin from now,” Sengoku told reporters.

Noda echoed Sengoku’s view. While he declined to clarify when the government would put together the additional stimulus steps, he said the task of compiling emergency measures should not be delayed by political affairs, referring to the DPJ presidential election scheduled for Sept. 14.

The finance minister also said the pace of economic growth is slowing a little but added, “I certainly do not think (the economy) is in a lull” — a comment that conflicts with the views of other government officials.

Noda maintained the government’s basic view that “the economy is regaining (its) foothold in a stable manner.”

In a separate news conference, DPJ policy chief Koichiro Gemba suggested the Bank of Japan should further ease its monetary policy and cooperate with the government in boosting the economy, which has been suffering from falling prices, slowing industrial output and high unemployment.

“I believe there are various measures the BOJ should take,” said Gemba, also state minister for civil service reform.

The BOJ has been under pressure from both ruling camp and opposition lawmakers to inject more liquidity to support corporate activities through such measures as increasing its purchases of government bonds and other assets.

Kan is expected to hold talks with BOJ Gov. Masaaki Shirakawa possibly next week and confirm cooperation between the government and the central bank in fighting the economic slowdown.

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