The government will review some of the spending plans pledged by the ruling party as part of an effort to rein in the country’s huge public debt, Japanese Finance Minister Yoshihiko Noda said yesterday.
“It’s a very severe situation,” Noda said in a television program, referring to the country’s public debt that is near twice the size of its GDP.
Noda said the government would consider which of the spending plans pledged earlier by the Democratic Party to prioritize.
“We can’t change everything [pledged by the party] all of a sudden. But we’ll do it steadily,” he said.
Japanese Prime Minister Naoto Kan, a fiscal conservative who took over the nation’s top job last week after the abrupt resignation of his predecessor, has made tackling the huge public debt a top priority amid market concerns about sovereign debt risk.
Kan on Friday pledged a fiscal policy overhaul to reduce the country’s massive public debt mountain, warning of a Greece-style meltdown.
Renho, the minister in charge of government revitalization, who goes by one name, said yesterday Japan’s “finance is said to be nearly default. It’s my role to overhaul the budget which has long relied on debts.”
The Democratic Party won power in a lower house election last year with a manifesto pledging generous spending plans, such as payouts to households with children and aid for farmers.
But analysts have said the Democrat-led government needed to scale back the spending plans, as rating agencies threatened to downgrade Japan’s sovereign debt rating unless it came up with a credible plan to fix the country’s finances.
Kan seemed to have got the message.
He told reporters on Saturday he may consider reducing the amount of child allowances paid to households in cash due to fiscal constraints, local media reported on yesterday.
The government is also set to unveil this month medium- and long-term targets to fix Japan’s finances, as well as a strategy to boost the country’s economic growth.
Noda said the government hoped to announce the fiscal targets and the growth strategy on Friday.
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