The Bank of Japan said Wednesday that if necessary it will purchase government bonds from the Finance Ministry's Trust Fund Bureau under three-month resale agreements between April 1 and March 31, 2002, to cover fund shortages expected in the government's investment and loan program.

The central bank said it will buy the bonds only when the Finance Ministry fails to attract sufficient bids through an auction or when the government needs more funds than such an auction can raise.

The purchase prices and yields will be determined in conformity with prevailing market conditions and the total balance of bonds held by the BOJ will be limited to 7.8 trillion yen, the BOJ said.

The bank said it will publish the balance every month.

The Finance Ministry said Wednesday that three auctions are planned between April and June to sell bonds entrusted to the Trust Fund Bureau account.

The BOJ and the ministry said in November that the central bank will temporarily buy government bonds from the Trust Fund Bureau for two years starting in April under resale agreements, but they did not give specific conditions under which the BOJ would do so.

The step is intended to ensure that the bureau has ample liquidity as 49 trillion yen is expected to be withdrawn from the state-run postal savings system during fiscal 2000 and 2001.

The Trust Fund Bureau lends money from the postal savings and insurance systems as well as money from the public pension system. governmental financial institutions that invest in housing, public works and other projects.

It will be the first time the bureau sells government bonds via repurchase agreements.