"I put the life of my cabinet on the line in turning around the economy into clear-cut positive growth in fiscal 1999 and in achieving economic recovery by fiscal 2000," Obuchi said in a policy speech at the start of an extraordinary session of parliament.

Obuchi said present conditions in the economy were severe as sentiment among businesses and consumers continued to be weak, and business conditions, including those for financial institutions, remained difficult.

"We are in what might be called a `recessionary cycle'," he said.

But, the prime minister said by implementing various measures including an economic stimulus package worth "well over" 20 trillion yen ($162 billion), Japan will achieve growth in the next fiscal year.

The government earlier this month adopted an economic package totalling nearly 24 trillionyen including over six trillion yen in income and corporate tax cuts.

Obuchi also said the government will carry out both fiscal and tax measures to boost housing investment.

He reiterated the government's intention to implement around four trillion yen of income tax cuts and lower the effective tax rate on companies to near 40 per cent, but did not touch on the issue of lowering the consumption tax.

The prime minister also said: He hopes to deepen ties with other political parties and seek agreements so he can carry out "responsible politics" for the people. He did not specify a particular party.

He would like to discuss with leaders of the Association of South East Asian Nations further cooperation towards overcoming the Asian economic crisis when they gather in Vietnam in December.

The fiscal reform law, which seeks eventual elimination of deficit-financing bonds as well as a reduction in the budget deficit to three percent of GDP, will be frozen.