Private economic experts urged lawmakers during Wednesday's Diet session to double their efforts to make Japan's public finances sound again.
"The government should stick to its policy of fiscal consolidation," Toshiki Tomita, an executive fellow at Nomura Research Institute Ltd., told the House of Representatives Budget Committee.
Tomita said Japan's budget deficit has risen beyond sustainable levels after a series of pump-priming measures over the past several years.
Commenting on the budget for fiscal 2002, which starts April 1, Tomita said the government has succeeded in making its spending more efficient while reducing deficits in the primary balance.
In a state of primary balance, government spending equals revenues, excluding debt-servicing costs and bond revenues.
Koyo Ozeki, a director at Merrill Lynch Japan Securities Co., told the committee that the government should inject public funds into troubled banks.
"Given the sheer amount of bad loans and the banks' financial standings, the injection of public funds is again inevitable," he said.
On the problem of deflation, Gakushuin University professor of economics Kikuo Iwata said Japan should shift its monetary policy toward one aiming at inflation. "Deflation is an evil," he said.
Hannan University professor of economics Mamoru Ishida said Japan has lost competitiveness in the field of investment and production as a result of globalization.
