[TOKYO] Japan's government said on Monday it would "steadily reduce" new government bond issuance for the next fiscal year from that planned for the current year ending in March 2015 in a bid to curb runaway public debt.
In a draft budget outline submitted to the top economic council, Tokyo also pledged to "do its utmost" to meet its goal of halving the country's primary budget deficit in the next fiscal year.
The outline, to be endorsed by the cabinet by year-end, highlighted the delicate balance Prime Minister Shinzo Abe must strike in reviving the economy while reining in public debt.
Japan's public debt tops twice the size of its economy, by far the worst in the developed world.
In a show of Abe's resolve to keep Japan's public finances from deteriorating further, the government will lower new bond issuance for the next fiscal year for a third straight year.
Based on the budget outline, the government is expected to draft an annual budget for the next fiscal year in January, a month later than usual due to Abe's decision to call a general election earlier this month.
In the draft outline, the government reiterated its pledge to bring the primary balance, excluding new bond sales and debt servicing, into the black by the fiscal year to March 2021, adding that it would draw up concrete plans by next summer. "We will create a positive cycle between economic revival and fiscal consolidation by achieving a strong economy to boost tax revenue while accelerating efforts to curb spending without making any sector sacrosanct," it said.
It mentioned rising welfare spending in a fast-ageing society.
The draft repeated Abe's pledge to implement a sales tax hike to 10 per cent in April 2017, which was delayed from next year, in order to secure trust from the international community.