Kazuo Kitagawa, the New Komeito policy chief, said Friday an extra budget worth 5 trillion yen to 6 trillion yen is needed for the current fiscal year to help buoy the faltering economy.
"I find it feasible to work out an economic package, with the amount of projects totaling 5 trillion yen to 6 trillion yen," Kitagawa told Kyodo News.
Kitagawa said the government should refrain from relying too much on borrowings to finance the extra budget for fiscal 2001. Prime Minister Junichiro Koizumi has pledged to cap the issuance of new government bonds at 30 trillion yen in fiscal 2002.
The government could issue bonds worth less than 2 trillion yen to fund the extra budget while also using 300 billion yen in reserves set aside for public works and 240 billion yen in surplus funds carried over from the last fiscal year, Kitagawa said.
"All told, we could secure sources of revenues totaling some 2.5 trillion yen," he said.
But in implementing any economic package, the government should avoid resorting again to conventional measures that focus on public works projects, Kitagawa said.
"We must compile an extra budget that does not contradict structural reforms," he said. "Its pillar should be the policy of creating jobs and realizing urban renewal."
Kitagawa was also negative about a proposal floated by some government and ruling party officials for the Bank of Japan to adopt an inflation target to combat deflation.