TOKYO -- Japan's newly appointed finance minister, Hirohisa Fujii, will focus on fixing the country's economy, even if that means it will take longer to reduce Japan's massive public debt and possibly prompt more new-debt issuance.In an interview this week, the 77-year-old Mr. Fujii said he would prioritize economic growth over fiscal overhaul. "If you allow me to make the story short, while fiscal rehabilitation is important, it comes after economic growth," he said. "There's no question that unless the economy recovers to some extent ... our country's fiscal state will get even worse."
He also hinted that the Democratic Party of Japan government may come up with new stimulus steps if the economy weakens, even if that would require a further issuance of bonds.
"We certainly must keep in mind the possibility of [the Japanese economy entering] a second round of sharp contraction," said Mr. Fujii, who was named finance minister Wednesday by new Prime Minister Yukio Hatoyama.
While exports to China and India are rebounding, Japanese business investment remains weak, and "wage and employment conditions are considered to be in the worst shape in the postwar era ... which will surely ricochet against consumer spending," he said.
Mr. Hatoyama has insisted that the DPJ's promised economic-support measures will be financed without floating more debt, but Mr. Fujii's remarks suggest the government's focus will be ensuring that the economy doesn't deteriorate further.
Should the economy demand more money, "it is possible" the government will sell more bonds to raise cash, Mr. Fujii said, despite worries about how that could worsen Japan's poor fiscal state. The country's public debt stands at 170% of gross domestic product -- the worst ratio in the industrialized world -- and the Organization for Economic Cooperation and Development expects the figure to hit around 200% next year.
The DPJ government could also support the economy by redirecting trillions of yen it plans to save through scrapping steps it considers ineffective in the previous government's last stimulus package, valued at 15.4 trillion yen, or $169 billion.
Mr. Fujii's immediate task is to work with Naoto Kan, a top DPJ officials who Wednesday was formally named minister in charge of the new National Strategy Bureau. The bureau is expected to set guidelines on key policies such as the national budget. Mr. Kan is expected to determine the priorities and outline of the budget, while Mr. Fujii will finalize details and make ends meet as tax revenue shrinks due to the economic slump.
