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Last Updated: Tuesday, 26 September 2006, 14:53 GMT 15:53 UK
Abe outlines Japan economic plan
Shinzo Abe, Japan's new Prime Minister
Mr Abe says he has an appetite for economic reform
Shinzo Abe, Japan's new prime minister, has said he is intent on extending the country's economic recovery while also tackling its shaky public finances.

The newly-elected leader said he would push ahead with economic reform and seek to eliminate Japan's massive budget deficit by 2011.

He has handed the key post of finance minister to Koji Omi, the veteran former economic planning chief.

However, critics say that Mr Abe's cabinet has a conservative flavour.

As a result, it is argued that difficult economic reforms may not be at top of the new prime minister's list of priorities.

'Enhance' reform

But Mr Abe has denied this, saying his government would undertake fiscal reform while also cutting wasteful public spending.

"There are some people saying that the government should take a break on structural reform or we should change course," he said.

"But I would rather accelerate and enhance structural reform."

With public debt higher than any other leading industrialised country, Mr Abe also committed himself to "restoring the state's finances".

It is far too early to say the job is done in terms of reform
Sikuho Takeshita, Mizuho International

In a slew of job giving, Mr Abe also named economics professor Hiroko Ota as economics minister and Akiri Amari, a senior figure in the ruling Liberal Democrat Party, as trade minister.

One economist said the appointments reflected the fact that Mr Abe was more conservative than predecessor Junichiro Koizumi.

"Some of the names there remind one of the old days," Sikuho Takeshita, from Mizuho International, told the BBC.

"It is far too early to say the job is done in terms of reform."

Economic advantage

Former finance Minister Sadaku Tanigaki, who presided over a turnaround in Japan's economic fortunes, has called for greater clarity regarding Mr Abe's economic policies.

Mr Tanigaki said the new administration must maintain the confidence of the financial markets by proving it was serious about restraining spending and cutting debt.

Assembly line at Nissan's Yokosuka plant
Confidence among Japanese companies is high

Mr Omi acknowledged that rebuilding Japan's public finances was a "very big challenge".

"Japan's economy is doing pretty well but fiscally it is in a very severe condition," he said.

With Japan forecasting growth of more than 2.5% this year, experts do not expect Mr Abe to make any dramatic shifts in economic policy.

"I don't think there will be any real difference on the surface because the economic situation is turning around," Mr Takeshita said.

After years of stop-start growth, Japan has seen unemployment fall, consumer spending pick up and business confidence grow.

This upturn led to the Bank of Japan lifting interest rates to 0.25% in July, following several years where rates had been held at zero.

Abe elected as new Japan premier
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Japan scraps zero interest rates
14 Jul 06 |  Business

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