Fujii Says Japan Must Cap Bond Sales as Hatoyama Backpedals
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By Keiko Ujikane
Dec. 11 (Bloomberg) -- Japanese Finance Minister Hirohisa Fujii said the government must cap bond sales at 44 trillion yen ($495 billion) next year, in contrast with Prime Minister Yukio Hatoyama, who indicated he is prepared to abandon the pledge.
“Such a figure doesn’t need to be seen as a big problem for the Cabinet,” Fujii said at a news conference in Tokyo today. “We have to do it,” he said of the bond limit, which was the amount that the previous government budgeted for the current fiscal year ending in March 2010.
Faced with declining tax revenue and a public debt burden that’s already the largest in the world, Fujii is trying to maintain fiscal discipline without choking off a recovery from the country’s worst postwar recession. Bonds fell for a second day on concern that Hatoyama will step up debt issuance.
“The government’s duty is to protect the lives of citizens,” Hatoyama said earlier today. “We’re not saying that we can’t go even one yen” above the 44 trillion yen target, he said.
In response, Fujii said he didn’t think that keeping the debt-sale cap would hurt people’s lives. Maintaining a stable bond market is “extremely important,” he said.
The yield on Japan’s 10-year bond rose two basis points to 1.27 percent at 2:18 p.m. in Tokyo. Ten-year yields are likely to climb to 1.35 percent by the end of the year, according to a Bloomberg News survey of economists.
Budget ‘Target’
Deputy Prime Minister Naoto Kan said today that Hatoyama asked to include the 44 trillion yen as a “target” in a budget outline that may be released as soon as next week.
“I can’t say” if the goal will be met, Kan said, because the government hasn’t calculated its estimate for tax revenue for the year starting April 1. Tax receipts for the current fiscal year will fall below bond issuances for the first time in 63 years, Fujii said this week.
Deflation and a rising yen threaten Japan’s recovery. The world’s second-largest economy grew 1.3 percent in the three months to September, less than a third of the pace initially reported, revised figures showed this week. Household sentiment fell in November for the first time this year, the Cabinet Office said today.
The prime minister may be compelled to break the pledge to restrict next year’s bond sales as he battles squabbling within his coalition and sliding popularity.
Shizuka Kamei, the leader of junior coalition member the People’s New Party, said today that he wants the budget to be 95 trillion yen. Fujii said he plans to trim more than 690 billion yen from the 95 trillion yen in budget requests made by government departments.
Hatoyama delayed an economic stimulus package this week to appease Kamei’s calls for higher spending. Kamei agreed to the plan after the prime minister added 100 billion yen, bringing its size to 7.2 trillion yen when it was released on Dec. 8.
To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net
Last Updated: December 11, 2009 00:23 EST
