The Finance Ministry said Tuesday that government bond issuance in fiscal 2005 could soar to 42 trillion yen to finance the state budget if the nation's economic growth remains sluggish.

This figure marks a huge increase on the 30 trillion yen limit promised by Prime Minister Junichiro Koizumi for fiscal 2002.

The ministry's estimate, featured in a report submitted to the Liberal Democratic Party, is based on the assumption that the economy will grow a nominal 0.5 percent in fiscal 2005 and that there will be no changes to the current tax and social security systems.

The calculations suggest the nation's finances could deteriorate further if the economic structural reforms initiated by Koizumi are not carried out.

The Council on Economic and Fiscal Policy, which is headed by Koizumi, estimated last month that the economy will grow only 0.5 percent without the advent of structural reforms.

The ministry expects the general account budget in fiscal 2005 to total 92.4 trillion yen, up from the 81.23 trillion yen allocated in fiscal 2002.

Under a 0.5 percent growth scenario, general expenditures on discretionary policy steps would increase to 51.4 trillion yen in fiscal 2005 from 47.4 trillion yen in fiscal 2002. Social welfare spending would meanwhile come to 21.4 trillion yen, up from 18.3 trillion yen.

On the revenue side, tax revenues would fall to 46.1 trillion yen in fiscal 2005 from 46.8 trillion yen in fiscal 2002. Revenues would increase to 48.5 trillion yen in fiscal 2005, however, should the government make progress on its structural reforms.

The ministry estimated in its report that the outstanding amount of government bonds at the end of fiscal 2015 would come to 836.6 trillion yen.