TOKYO (MNI) - Japanese Prime Minister Yukio Hatoyama has suggested that the government may have to allow the issuance of deficit-financing bonds to cover expected revenue shortfalls when it drafts the budget for fiscal 2010, the Nikkei reported on Thursday.

"Deficit-covering bonds are something that should be avoided, but we need to think about the matter while assessing the extent of the decline in tax revenue," he told reporters at the prime minister's office on Wednesday.

Hatoyama also noted that funding is necessary to address various economic and employment problems, and that the government may have to deal with unexpected issues that may require additional spending.

An increase in bond issuances "is not completely off the table, given that the drop in tax receipts is a legacy of the previous government," he said.

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