The Abe administration plans to extend temporary legislation for five years allowing the government to automatically issue debt to help fund the annual budget without Diet approval, according to government sources.
The special law, approved in fiscal 2012 and set to expire in fiscal 2015, will be extended to avoid suspension of government spending due to a political standoff, the sources said Tuesday.
In extending the legislation by five years, the administration is taking into account its 2020 fiscal reform goal, but there is concern that a lengthy extension could undermine the government's financial discipline.
The administration plans to rein in bond issuance to reduce the national debt that has been growing to finance swelling social security costs.
The Abe administration has committed internationally to bringing government finances into the black by fiscal 2020, as the country's financial health is the worst among major industrialized economies, with public debt at more than 200 percent of nominal gross domestic product.
The administration will submit a bill to the Diet after it convenes Jan. 4.
Under the finance law, the government is only allowed to issue construction bonds to fund public works.
Given the significant shortfall in tax revenues to finance government spending, however, the Diet passed a special law every year until fiscal 2011 to enable the government to issue deficit-covering bonds for other purposes once the annual budget is enacted.
But a divided Diet prevented enactment of the law for fiscal 2012, prompting the government led by Prime Minister Yoshihiko Noda to compile a bill to approve debt-financing bonds from fiscal 2012 through fiscal 2015.