TOKYO. Aug 7: In his first major policy speech before Parliament. Prime Minister Keizo Obuchi pledged on Friday to drive ahead with tax cuts and new spending to revive Japan's sputtering economy, says AP.

Obuchi, who was elected premier last week, also said he would push a plan to clean up the banks' bad debt mess, cut the bureaucracy and put together a special economic strategy council.

"1 have a strong sense that without courage today, there is no tomorrow — mark my words." he told the first parliament session under his rule. The session was opened Friday morning by Emperor Akihito.

Japan's new government is under mounting pressure to deal with the country's depending recession. Unemployment hit a record-high of 4.3 per cent in June and the banking system is groaning under piles of bad

in a further sign of economic weakness, the head of Japan's Economic Planning Agency on Friday said he will issue a report next week showing that the country's finances are worsening.

"The economy is clearly floundering." Taichi Sakalya told reporters.

Obuchi's forcefully worded speech broke little new ground from statements he and Finance Minister Kilchi Miyazawa have made since the new government was put together last week after Oouchi's confirmation in Parliament.

But the new prime minister, who took office with approval ratings hovering around 30 per cent, vowed to implement the tough reforms and policies needed to turn the economy around.

"Our Cabinet s fate depends on us putting out country back on a recovery path in the next couple of years." Obuchi said in

a speech interrupted several times by applause.

A major plank in Obuchi's programme is a package of six bills setting up a "bridge bank" system to take over insolvent banks and keep them running while bad loans and remaining assets are sold.

The legislation is needed to clean up the estimated 80 trillion yen (551 billion dollars) in problem loans weighing down Japanese financial institutions. Most of the debts are left over from the collapse of the real estate market in the early 1990s.

"In order to revive Japan's economy, we must first of all ... settle the bad debts held by financial institutions." he said, calling for speedy implementation of the plan.

The plan faces problems, however, in Parliament, where Obuchi's ruling Liberal Democratic Party only holds a majority in the lower house.

Some critics object to the use of 11 trillion yen (75.9 billion dollars) in public funds to ball out the banks. Others say the plan needs to be strengthened to allow weak banks to fall, or that it should include penalties for directors of mismanaged banks.

Another major piece of Obuchi's programme is tax cuts aimed at getting thrifty consumers to spend more money and give strapped corporations more funds to Keep afloat.

Obuchi said he planned about 4 trillion yen (27.6 billion dollars) in personal tax cuts, moving to reduce the maximum combined national and local income tax bite from 65 per cent to 50 per cent.

The prime minister also said he wanted to cut the corporate tax rate from 46.3 per cent to 40 per cent, comparable to rates in other countries. That was expected to amount to nearly 3 trillion yen.