TEHRAN The politician who appears set to win the race for Japan's prime minister, Junichiro Koizumi, will not adopt policies that would result in economic contraction, one of his rivals said on Monday.

Shizuka Kamei, one of the four contenders running to replace lame-duck Prime Minister Yoshiro Mori as president of the ruling Liberal Democratic Party (LDP), said he did not believe that Koizumi, if chosen to head the nation, would implement steps that would result in a shrinking of the economy.

Koizumi, who took a commanding lead in early voting by LDP local chapters, has stressed the need for fiscal reform, including a call to rein in the amount of fresh government debt at around current levels.

Kamei, who has been an advocate of more public spending to keep Japan's fragile economy afloat, said Koizumi would not take policies on fiscal reform that would be too unrealistic.

"It's realistic to reduce the fiscal deficit by stabilizing the economy. I don't think Koizumi opposes this," Kamei said.

Kamei said no basic differences existed between him and Koizumi in fiscal and economic policy.

Koizumi has said his call to cap government bond issuance for new financing at 30 trillion yen ($247.1 billion) was in no way a call for fiscal contraction now.

To help finance the budget for the fiscal year that started on April 1, the government plans to issue a record 98.50 trillion yen in government bonds.

Of the total, it plans to issue 28.318 trillion yen in bonds for new financing.

The LDP president is virtually guaranteed the prime minister's post given the majority the LDP and its coalition partners hold in the Parliament's powerful Lower House.

Former vice finance minister Eisuke Sakakibara -- previously known as Mr. Yen for his influence on the Japanese currency -- said Japan could face a financial crisis triggered by a collapse of the government bond market between June and August this year.

However, Miyazawa denied there was any likelihood of a collapse in the bond market.

Earlier this month, the government announced a package which included strict time limits for banks to write off bad debts and the setting up of a body to buy parts of bank's vast shareholdings in other companies.