Japan PM says stimulus spending not 'forever'
Baku, January 29 (AZERTAC). Japanese premier Shinzo Abe pledged on Monday he would not keep stimulus spending "forever" in a policy speech ahead of a budget that will raise more in taxes than it does from borrowing.
Abe's plan to overturn four years in which the majority of money the government spends is raised from selling bonds came as an opinion poll showed he has enjoyed a boost in popularity since coming to power last month.
"We can't continue fiscal spending forever," he told parliament at the opening of a new session. "We will draw up and implement a growth strategy that will see private investment and consumption grow sustainably."
"The greatest and most urgent challenge for our country is revival of the economy. We can't exit from deflation and from a high yen by keeping the past measures. Therefore I present a bold policy package," he said.
The policy speech comes after his government announced a $226.5 billion stimulus package earlier this month, raising concerns over the level of Japan's already-towering public debt.
In his first policy speech since taking office in December, Abe repeated his "three arrows" of economy policy: aggressive monetary easing, flexible fiscal spending and a growth strategy that would induce private investment.
Japan's budget for fiscal 2013 starting April will likely stand at 92.61 trillion yen ($1.05 trillion), with revenue estimated at 43.10 trillion yen and new bond issuance at 42.85 trillion yen -- the first time in four years revenue surpasses new bond issuance, major newspapers reported Monday.
Under the budget plan, spending on defence will increase by 40 billion yen, the first rise in 11 years, which comes against the backdrop of a lingering territorial row with China over the sovereignty of a chain of islands in the East China Sea.
Abe, whose envoy met Chinese Communist Party chief and president-in-waiting Xi Jinping in Beijing last week, shied away from mentioning China specifically, but told parliamentarians: "The situation around Japan is increasingly severe".
"My cabinet will resolutely protect lives, assets and territory of Japan, both on the waters and in the air, strengthening development and control, as well as security of remote islands on the border," he said.
He made no direct reference to the Japanese-controlled Senkaku islands, which China claims as the Diaoyus, and gave no further details on what this "development" might mean.
Any effort to build on the disputed islands would likely badly inflame the already testy relationship with China.
Abe said he would meet US president Barack Obama in the third week of February as part of an effort towards the "revival of a strong Japan-US alliance."
He made no mention of election promises to amend the US-imposed pacifist constitution and review the restrictive policy on collective self-defence -- largely interpreted as its right to fire back if US forces in Japan are attacked.
Pundits expect these issues to be left on the back burner until upper house elections due later this year, which Abe's Liberal Democratic Party needs to win if it is to have the power to drive through some of the controversial changes he has talked about.A survey published Monday by the business daily Nikkei showed public support for Abe rose by six percentage points to 68 percent from late last month, just days after Abe's cabinet was launched.
As well as broad approval of economic management measures, the survey showed a majority of voters liked Abe's response to the Algerian hostage crisis in which 10 Japanese people died.
Abe returned home early from a foreign trip to deal with the crisis, which also saw his government call in the Algerian ambassador to demand answers on the armed response, which many in Japan criticised as hasty.
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