The Japanese government should not issue additional bonds in fiscal 2013, even if it compiles an extra budget to fund a stimulus package aimed at easing the potential negative economic impact of the planned sales tax hike next April, a senior vice finance minister said Thursday.
Shunichi Yamaguchi said at a press conference, "We are not in a situation in which we can newly issue deficit-covering bonds" as Japan has internationally pledged to restore its fiscal health, already the worst among developed economies.
"We should also refrain" from boosting issuance of construction debt, used to finance public works projects, in order to maintain market confidence in Japanese government bonds, Yamaguchi added.
His remarks came after Prime Minister Shinzo Abe on Tuesday instructed ministers to draw up a stimulus package by the end of this month to prevent the scheduled consumption tax hike to 8 percent next April, from the 5 percent at present, disrupting the economic recovery.
To fund the package, Abe's administration is expected to craft a supplementary budget for the current fiscal year ending March, but it remains uncertain how the Japanese government will be able to secure financial resources amid budgetary constraints.
Abe is likely to announce early next month, possibly on Oct. 1, his final decision on whether to carry out the first round of a planned two-stage increase in the sales tax rate to 10 percent by the end of October 2015, aimed at cover swelling social security costs amid the graying of Japan's population.
Japan's central government debt topped 1,000 trillion yen ($10.0 trillion) for the first time ever at the end of June, the Finance Ministry said last month.