Private sector members of Japan's Council on Economic and Fiscal Policy (CEFP) stated on Thursday that measures must be taken to maintain market confidence in the country's fiscal health, even as Japan increases spending to revive economic growth.

The members noted that Japan's economy contracted in the third quarter, while inflation remained high at around 3%, primarily due to rising food prices. "Therefore, the government must implement necessary and sufficient fiscal measures to invest in crisis management and growth areas," the members said in a proposal submitted to the panel.

The proposal emphasized that "the most critical aspect is ensuring the sustainability of Japan's fiscal position and market trust in its finances," such as by cutting existing wasteful expenditures.

In addition to steadily reducing Japan's debt-to-GDP ratio, the proposal highlighted the need for various measures to guide fiscal policy while "consistently monitoring interest rates, exchange rates, and stock market conditions."

Recent declines in Japanese government bond prices and the yen have been attributed to market expectations that Prime Minister Sanae Takaichi's massive spending plans will lead to increased debt issuance and prolonged inflation.

Four private sector members, including former Bank of Japan Deputy Governor Masazumi Wakatabe and economist Toshihiro Nagahama, jointly called for fiscal sustainability in a statement.

The CEFP, responsible for overseeing Japan's fiscal blueprint and long-term economic policies, will consider the private members' proposals during its deliberations.