Bank of Japan urges debt cuts

DEFICIT cuts and deregulation are required to boost economic growth in Japan, the Bank of Japan’s governor Masaaki Shirakawa said yesterday.

“Japan’s fiscal situation is of course in very bad shape,” he said. “As history shows, no country can continue to run fiscal deficits forever.”

The Bank could increase its bond purchases if the economic situation deteriorates further, he said, yet warned that this could give markets the impression that it was directly financing government debt.

Shirakawa was cautiously optimistic over Japan’s economic outlook.