Japan can't fix fiscal health while in deflation -LDP's Abe

TOKYO Tue Nov 27, 2012 12:24am EST

TOKYO Nov 27 (Reuters) - Japan's opposition leader and possible next prime minister, Shinzo Abe, said on Tuesday the country cannot restore its fiscal health unless deflation is overcome, calling for bolder monetary and fiscal stimulus to revive the economy.

"The government and the BOJ should achieve a policy accord and discuss an inflation target to pursue bold monetary easing. The 1 percent 'goal' already announced by the central bank won't do. It must instead be a 'target' of 2 percent," Abe told a symposium debating Japan's growth strategy.

Abe, a former prime minister chosen to again head the Liberal Democratic Party in September, is seen as likely next premier after a general election on Dec. 16 that surveys suggest his party will win.

In an effort to shift the debate away from the Bank of Japan, its Governor Masaaki Shirakawa repeated his view at a meeting on Oct. 30 that monetary easing alone cannot beat deflation, urging the government to pursue fiscal reform and deregulation to boost domestic investment.