TOKYO (AFX-ASIA) - State Minister for Economic and Fiscal Policy Taro Aso said the economic recovery is continuing at a moderate pace but Japan can no longer rely on fiscal spending or zero interest rates to maintain growth.
"The time that Japan relied on public works, zero-rates, as well as public money is over," he said. "If we consider recovering corporate earnings, as well as capital expenditure, the economy is almost at the top of the mountain."
However, Japanese people still cannot feel the benefits of the economic recovery and consumption remains flat, he added. "As long as stock and land prices do not go up, people will not feel that the economy is recovering," he said.
Aso said he is not too concerned about the size of the fiscal deficit as Japan has large credits overseas.
"Japan's fiscal deficit ratio against GDP was 45 pct last year if you consider overseas credits," he said. "You can compare this figure with the EU's 47 pct, so I don't think Japan's fiscal deficit is wild."
He said the large levels of savings of individuals should also help offset concerns over the deficit.
"If the size of GDP rises, the ratio (of debt to GDP) will eventually go down," he said. "The deficit has to be resolved in that way."
Aso said he feels a heavy responsibility after his appointment today, following the resignation of the former economic and fiscal policy minister Fukushiro Nukaga.
Nukaga resigned after reported influence-buying allegations related to 15 mln yen in payments made by insurer KSD.
"Japan has to take action for economic recovery. I feel a heavy responsibility to sort out this important matter," Aso said.
Asked about the relationship between KSD and LDP members, he said: "Everybody asks that but I don't know the details of what KSD does. I don't know the chairman of KSD either."
Aso said he has no connections with KSD and has not received any money from the company.