TOKYO (AFX-ASIA) - Takami Eto, a co-faction leader in the ruling Liberal Democratic Party, said the government will move towards abandoning fiscal restraint and return to a policy of increased spending to stimulate growth.
"There is no prospect that the government can overcome looming crises such as the possible aftermath of the launch of the bank 'payoff scheme' and closure of the corporate accounts in March," Eto said at a meeting of his faction.
The so-called payoff scheme involves the introduction of a ceiling on government guarantees on bank time-deposits of 10 mln yen per account and is suspected to have led to a shift of deposits out of financially weaker banks.
"We have argued that the government should shift its policy as soon as possible to boost the economy and I believe the government will move in that direction," Eto said.
"The mad-cow disease problems will become a full-blown issue for the Koizumi administration during the rest of the Diet (parliament) session, as will the public burden of health insurance costs," he said.
He noted increased opposition from opposition and ruling party politicians to the government's plans to raise health costs for individuals.
Eto's faction of some 50 lawmakers is also led by the conservative former party secretary-general, Shizuka Kamei.