Vow to cut public debt

TOKYO: Japan’s opposition leader Yukio Hatoyama, seen as the likely next prime minister, said today he would strive to cut soaring public debt amid criticism that his party is adopting free-spending policies.

Hatoyama was appearing in a television debate with Prime Minister Taro Aso and other political leaders one week before a general election that is widely expected to end the ruling party’s long reign. “I won’t let it increase. The country would go belly up if it increases from the current level,” Hatoyama said on a television show when asked about Japan’s ballooning public debt. “We must make efforts to reduce it,” he said, adding the government would review public spending.

Japan’s state coffers are ridden with debt but the government has recently stepped up issuing bonds to finance a series of pump-priming measures amid the worst recession since World War II. More than 44 trillion yen ($460 billion) in central and local government bonds and other public debt is to be issued in the current fiscal year to March 2010, up from 25 trillion in the pervious year.

Official data showed this month that the world’s second-biggest economy grew by 0.9 per cent in the April-June quarter for annualised growth of 3.7 per cent, meaning Japan has officially emerged from recession.

“It was certain that our policy was right,” Aso said, defending the government’s record, while Hatoyama countered that recovery had come at too high a price. “It’s not good to see this level of economic or GDP rebound after increasing debt by 20 trillion yen,” he said. “The future is very uncertain. I cannot believe the Japanese economy will get better with the employment situation predicted to worsen further.”

Hatoyama said his party aims to boost the economy with direct payouts to households, including subsidies to families and scrapping tolls on expressways.