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Tokyo - Japan's government on Tuesday pledged austerity and a cap on new bond issues as it drafts a budget for next fiscal year while seeking to reduce a mountain of public debt.
Prime Minister Naoto Kan, since taking office early last month, has pledged an ambitious overhaul to reduce Japan's massive public debt, which is nearing 200% of GDP, the highest level in the industrialised world.
Tokyo said last month it aims to cap general account outlays at ¥71 trillion for each of the next three years, including tax grants to local government but excluding debt-servicing costs.
The sum is roughly the same as the planned expenditure for the current year.
"It is the grand rule that we need to draft the budget within the basic framework on expenditure that has been decided," Chief Cabinet Secretary Yoshito Sengoku told a news conference.
Sengoku, the top government spokesman, also confirmed the centre-left government aimed to keep new bond issuance at or below the current record level of ¥44.3 trillion.
The government is working to decide this month on basic rules for drafting the budget for the fiscal year 2011 starting next April. Cabinet ministers are required to submit their requests by the end of August.
The total national budget has expanded to a record ¥92.3 trillion for the current fiscal year, adding to the country's bulging public debt burden as Tokyo also tries to stimulate a sluggish economy.
"Nobody thinks the country can carry on like this, and it is important to have a certain level of fiscal discipline," said SMBC Friend Securities market analyst Yasushi Noguchi.
- AFP
