18 October 2001, 14:20  Fukuda confirms Shiokawa's view economy may shrink in FY 2001

TOKYO, Oct. 18 (Kyodo) - Chief Cabinet Secretary Yasuo Fukuda suggested Thursday that the economy could shrink in fiscal 2001 as the price for maintaining the policy goal of limiting the year's bond issues to 30 trillion yen. The government's top spokesman was responding to reporters' questions on a remark Thursday morning by Finance Minister Masajuro Shiokawa that the economy could contract in fiscal 2001. "What is at stake is whether the government should stick to the 30 trillion yen line," Fukuda told a news conference. "It is a significant ideal to contain the scale (of the net bond issue sum) firmly without resorting to further fiscal stimulus measures," he said. Earlier in the day, the finance minister was quoted as telling a key Liberal Democratic Party (LDP) council meeting, "I cannot guarantee that the economy will not contract." The remark at the LDP Policy Deliberation Commission has deepened concern that Japan may sink into deeper economic doldrums and not be able to keep its international promise to prevent the economy from contracting in the year through next March 31. Earlier this week, the Finance Ministry proposed limiting the size of a supplementary budget for fiscal 2001 to 2.7 trillion yen, of which 1.7 trillion yen would be funded with additional bond issues. At Thursday's LDP commission meeting, legislators dismissed the proposed size of the auxiliary budget as too small to revive the anemic economy. Since the regular fiscal 2001 budget enacted earlier this year calls for floating a net 28.3 trillion yen in bonds, it has left the government with room to issue 1.7 trillion yen in additional bonds without overstepping the 30 trillion yen boundary.

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