Japan will try to curb spending to tame debt

[Wang]

Japan will try to curb spending to tame debt

www.chinaview.cn 2005-01-24 0824

BEIJING, Jan. 24 -- Japan will try to curb spending to tame the world's heaviest public debt and work together with the Bank of Japan to stamp out more than six years of deflation, Finance Minister Sadakazu Tanigaki said.

"We are determined to overhaul the structure of the economy to achieve sustainable growth," Tanigaki said in a speech delivered to parliament at its opening session.

Japan's public debt has mushroomed amid three recessions since 1991 as the government tried to spur the economy with spending on roads, bridges and dams and through tax cuts.

Combined central and local government debt will reach 151 per cent of gross domestic product by March 2006, the Ministry of Finance projected last month, the heaviest in the Organization for Economic Co-operation and Development.

Tanigaki said Japan's fiscal health "is in a very severe state" as government bond sales are projected to reach 538 trillion yen (US$5.2 trillion) by March 2006.

"If this situations is left as it is, it will hamper economic growth," he said.

The Japanese economy is recovering without depending on public works spending, Tanigaki said. "Moderate" deflation continues, he added.

Japan's core consumer prices, which exclude fresh food, have risen in one month since April 1998.

Core prices fell 0.2 per cent in November from the year before, accelerating from a 0.1 per cent drop in October.

The Japanese economy will expand 1.6 per cent in the fiscal year that starts April 1, slowing from this fiscal year's projected 2.1 per cent, the government projected in December.

Tanigaki reiterated that Japan is ready to take "appropriate action" in the currency market if needed, suggesting the country may sell yen if the currency gains rapidly.

Japan, which sold a record 32.9 trillion yen (US$317.8 billion) in the fiscal year ended March 31, 2004, to stem the yen's gains, has not sold its currency this fiscal year.

Tanigaki also said foreign exchange rates should move in a stable manner, reflecting fundamentals of economies, and the government will closely monitor currency moves.

The yen traded at 103.37 against the dollar in Tokyo, from 103.39 last Thursday in New York.

(Source: China Daily, by Mayumi Otsuma)

http://news.xinhuanet.com/english/20...nt_2499123.htm

[Index]

Apparently there is a lot of money frozen in personal savings in Japan, which is not helping the economy at all. There needs to be increased public spending to get this money moving again.