Japan needs to fix its finances -BOJ Shirakawa quoted

TOKYO, Nov 4 - Bank of Japan (BOJ) Governor Masaaki Shirakawa said Japan needs to improve its fiscal position because of rising government bond issuance, the Yomiuri newspaper reported on Wednesday.

"When you look at Japan's finances on a global scale, our situation is bad," the Yomiuri quoted Shirakawa as telling reporters after giving a speech on Tuesday.

"It's necessary to restore the country's finances to a healthy balance."

Government bond issuance is likely to rise to a record above 50 trillion yen ($553.3 billion) in the fiscal year ending in March to make up for a decline in corporate tax revenue.

Japanese bond prices have been falling, pushing up yields, as investors fret about rising bond issuance. Falling bond prices are something the government would like to avoid as that would increase debt servicing costs.

Shirakawa also said adopting inflationary policies to reduce the cost of government borrowing would cause various problems, suggesting that it was wrong for the BOJ to increase its government bond purchases in an attempt to keep bond yields low, according to Yomiuri.