Japan says too early to decide on fiscal stimulus
2012-10-02 18:30:10
Japan's new finance minister said on Tuesday he would be concentrating on passing a key debt-financing bill for now and will make a decision on further stimulus for the flagging economy at a later date.
Officials have warned Japan's government could grind to a halt if parliament does not pass legislation allowing it to borrow more money.
But Prime Minister Yoshihiko Noda's political opponents are threatening to hold up bills until they have a timetable for a general election.
"It is important to look carefully at the condition of the economy, but it is too early to decide if any new fiscal stimulus is required," Finance Minister Koriki Jojima said on his first full day in the job.
Jojima restated the administration's position that there was a danger of government shutdown if a debt-financing bill for this year's budget is not enacted, because the country will effectively run out of money.
He said the "passage of the bill will be the biggest factor affecting the outlook of the economy".
Political gridlock in Japan's divided parliament over this bond bill could force the government to delay spending, Jojima's predecessor Jun Azumi warned in late August.
Noda said on Monday that his reshuffled cabinet will prioritise the bond legislation to finance spending in the debt-ridden country.
Jojima, something of an unknown in financial circles, also indicated he took a cautious view over the purchase of foreign bonds by the Bank of Japan, saying such a step "would require careful consideration".
Some ruling and opposition party politicians, including newly-appointed national policy minister Seiji Maehara, have called for the central bank to buy foreign bonds to help weaken the yen.
However, the calls face opposition from fiscal conservatives who say the central bank has no place in what would amount to currency control.
Last month, the Bank of Japan announced an extra bond-buying programme that will take its total monetary easing effort past $1 trillion.
The extension of the asset-purchase scheme was the latest bid to inject cash into a stalling economy where interest rates are already around zero and room for fiscal manoeuvre is small.