Japan's veteran lawmaker Sanae Takaichi, a contender to be the next prime minister, said on Tuesday the government should issue additional government bonds if necessary to fund measures to cushion a blow from rising living costs.

"We should use extra tax revenues to fund measures to combat rising cost of living," Takaichi told a press conference. "But if it's really necessary, we will have to issue government bonds."

Takaichi, who is known as an advocate of aggressive fiscal and monetary stimulus, is seen as one of the frontrunners in the ruling Liberal Democratic Party's leadership race.

Agriculture, Forestry and Fisheries Minister Shinjiro Koizumi, another contender in the race, said the government should fund any spending package with an expected increase in tax revenues and cuts to wasteful expenditures.

"While we need to be mindful of the need for fiscal discipline, sound fiscal policy rests on solid economic growth," Koizumi said.

Takaichi and Koizumi are among five candidates running in the LDP leadership ballot on October 4 to replace outgoing Prime Minister Shigeru Ishiba.

REUTERS

Japan PM contender Takaichi calls for debt issuance to fund spending if needed