Japan's birthrate policy could be funded by government bonds, says ruling party heavyweight

TOKYO, March 12 (Reuters) - Japan's efforts to counter the country's declining birth rate by doubling the budget for child-related policies could possibly be covered by government bonds, a ruling party heavyweight lawmaker said in a television programme broadcast on Sunday. "I think it's completely plausible to consider covering it with government bonds," Liberal Democratic Party (LDP) lawmaker Hiroshige Seko said during a segment on BS TV Tokyo regarding the government's policy to take "unprecedented" steps in countering Japan's falling birth rate. Seko, currently the LDP's secretary-general for the upper house, said there needed to be a discussion on whether to fund the policy with government bonds, taxes, an insurance scheme, or a combination of different sources, but added that funding through government bond issuance "should be allowed." Births in Japan plunged to a new record low of just below 800,000 last year, according to official records.

Prime Minister Fumio Kishida pledged in January to tackle the country's declining birth rate by submitting plans to double the budget for child-related policies by June. During the TV programme, which was recorded on Monday, Seko also spoke out against tightening Japan's current ultra-loose monetary policy. "Interest rates will probably rise naturally if we can sustainably achieve the 2% price goal and wages rise in accordance with that," the former economy minister said, adding he was against tightening when 2% inflation had not been achieved. The Bank of Japan (BOJ) maintained ultra-low interest rates on Friday ahead of a leadership transition in April. Incoming governor Kazuo Ueda has echoed current governor Haruhiko Kuroda's calls to keep an ultra-loose policy, but has also said he had ideas on how to exit low rates. (Reporting by Sakura Murakami; Editing by Jamie Freed)