Japan outlined plans today to cut spending and new bond issuance in next fiscal year's budget.
But worries over state debt remained due to the cost of caring for an ageing population and a weaker economic outlook
In addition to a budget blueprint issued by the Ministry of Finance that showed lower spending but a rise in debt servicing costs, the government issued an estimate for the economy to expand 1.6 per cent in the fiscal year starting next April.
That compares with a revised forecast of 2.1 per cent growth for the current year and follows a string of weak economic data that has prompted views that the economy has started to stall, with a slowdown in exports and production.
But the government's estimate is still stronger than economists' consensus of around 1.2 per cent growth in 2005/06.
The government estimate added to scepticism over Japan's long-term economic prospects, even as the budget blueprint highlighted higher tax revenues as well as stepped-up efforts to get state finances back into shape.