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Koizumi Promises to Increase Public Spending, Reduce Debt - 2001-11-22


The Japanese government has unveiled plans for another burst of public spending to support the troubled economy. Prime Minister Junichiro Koizumi says that despite the decision, he will honor a pledge to limit public debt.

Japanese leader Junichiro Koizumi is attempting to deflect criticism over the announcement Thursday that his government will compile a second supplementary budget.

The package will be worth about $20 billion and comes less than a week after the first round of extra financing, worth $25 billion, was approved. Japan is facing a deep economic contraction, and both budgets are aimed at stimulating the economy.

Critics say Thursday's decision shows that Mr. Koizumi is backsliding on a promise to rein in runaway public spending. But he told reporters that the two packages actually complement his economic reform program.

The prime minister says he has asked politicians in the ruling coalition to discuss ways to press ahead with structural reforms. He also says he has decided that the additional financing is needed to support those reforms.

A key plank of Mr. Koizumi's reform plan is a pledge to limit new issues of government bonds to about $240 billion. Because the government will finance the second extra budget by other means, it appears Mr. Koizumi will be able to keep his promise.

Many economists believe the second dose of spending is needed to keep the Japanese economy from sliding into a deep recession.

Japan's central bank recently downgraded its assessment of the economy for a sixth straight month. Exporters have been squeezed by the worldwide downturn in the technology industry, and unemployment stands at a record high.

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