Japan more flexible on new gov't bond issuance in FY 2010+

TOKYO, Dec. 12 Kyodo -
The government on Friday became more flexible about sticking to its goal of
keeping new bond issuance for fiscal 2010 below 44 trillion yen, with Prime
Minister Yukio Hatoyama saying the target still holds but could require a
review if the government needs to fund more steps to tackle the flagging
economy.

In an attempt to prevent Japan's fiscal position from deteriorating further,
the government, meanwhile, asked ministries and agencies to cut their total
planned expenditures for the year starting in April by more than 690 billion
yen, key Cabinet members said.
''It's the government's duty to protect the lives of the people,'' Hatoyama
told reporters at the prime minister's office. ''It is not that it (issuance)
should not exceed (the 44 trillion yen goal) by even one yen.''
But he also said the government has not given up on aiming for the 44 trillion
yen cap.
Chief Cabinet Secretary Hirofumi Hirano told a press conference that Hatoyama
requested after the day's Cabinet meeting that a basic policy on the fiscal
2010 budget, which the government plans to adopt next week, should incorporate
some target figures on new bond issuance.
Hatoyama told Hirano and Deputy Prime Minister Naoto Kan to state
''nonbinding'' targets using the figure ''44 trillion yen'' in preparing the
basic policy, Kan told a press conference.
Kan said his National Strategy Unit is working on expressions for setting the
target. But he said any other figures such as growth or tax revenue projections
are unlikely to appear in the basic policy.
Finance Minister Hirohisa Fujii said he believes it is possible to craft the
budget for the year starting April by sticking to the goal of keeping new bond
issuance below 44 trillion yen, despite a shortfall in tax revenue.
''I don't think people's lives will completely be ruined even if the government
sticks to the 44 trillion yen target,'' Fujii said at a news conference.
The 44 trillion yen cap is equal to the amount of new bond issuance planned by
the previous government in fiscal 2009 after drawing up the first extra budget.
Hatoyama and many of his Cabinet members have said that meeting the target is
important to show that the new government is serious about fiscal discipline.
As in this fiscal year, it is expected that tax revenue in Japan in fiscal 2010
will stay stagnant around 37 trillion yen.
The government is trying to scrape together about 10 trillion yen from nontax
receipts such as through tapping special account reserves.
But even if the government led by the Democratic Party of Japan manages to
achieve the 44 trillion yen cap, it is still short of around 4 trillion yen to
fund the 95 trillion yen pending annual budget.
General-account budgetary requests, submitted in October, amounted to a record
95.04 trillion yen, despite the government's ambitions to slash wasteful
spending.
Later Friday, Shizuka Kamei, head of the People's New Party, a junior partner
in the ruling coalition, told reporters that he had agreed with Hatoyama and
the head of another coalition partner to tap into assets in special accounts
before increasing issuance of new government bonds.
The leaders of the tripartite coalition -- Hatoyama, Kamei and Social
Democratic Party leader Mizuho Fukushima -- held talks at a restaurant in Tokyo
on Friday evening.
Kamei, who advocates aggressive fiscal spending, has said that the government
should maintain the budget at 95 trillion yen or more to weather the current
economic downturn.
In parallel with putting the final touches to the basic policy next week, Fujii
said the government will try to settle the rough amount of expenditures for
each ministry and agency, excluding outlays related to the DPJ's key campaign
pledges, by next Friday.
If necessary, Kan, Fujii and Yoshito Sengoku, state minister in charge of
administrative reform, will hold talks with other ministers who raise
objections to their requests.
The DPJ-led government is trying to draft the budget by the end of December,
although it is facing many difficulties on the back of widening differences of
opinion among Cabinet members over economic and fiscal management.
==Kyodo
2009-12-12 00:19:47