Japanese Prime Minister Junichiro Koizumi indicated on Wednesday he may abolish a 30 trillion yen (254.2 billion US dollars) cap for the issuance of new government bonds in the fiscal 2003 budget, Japan's Kyodo News reported.

"I will decide (whether the government lifts the cap or not) considering the economic situation in the next fiscal year," Koizumi was quoted as saying.

Japan's fiscal 2003 starts April next year.

Koizumi also suggested the allocation for public works in the fiscal 2003 budget could be slashed despite a request from ruling lawmakers to not make cuts.

"It's a strong request, but it will be difficult (to meet) because we don't have much money," the prime minister said.

In the fiscal 2002 budget, Koizumi's administration cut the allocation for the public work projects by 10.4 percent from fiscal 2001.