more active stance of investors to take credit risks. on the other hand, credit demand of private firms continues to lack momentum as the level of corporate expenditures such as business fixed investment remains below firms ’ cash flow. moreover, firms continue to reduce their debts as part of their balance - sheet restructuring measures. as a result, credit demand in the private sector has continued to be basically stagnant. in view of this, the underlying tone of private banks ’ lending remains sluggish. the amount outstanding of corporate bonds issued continues to be above the previous year ’ s level but the growth rate is slowing. meanwhile, the amount outstanding of cp issued is well above that of the previous year marking the highest level to date. the year - to - year growth rate of money stock ( m2 + cds ) is around 2. 5 percent. funding costs for firms are declining reflecting developments in market interest rates. in this financial environment, the lending attitude of financial institutions and corporate financing conditions remain easy. for the time being, attention should be paid to the effects of the additional monetary easing measures taken by the bank, while careful monitoring is required for the effects of stock price developments and corporate profit conditions on the behavior of financial institutions and the fund - raising conditions of firms.

with a concentration of high - tech businesses show strength, while those that are highly dependent on public investment remain in relatively severe circumstances. ii. factors behind the moderate and sustainable economic recovery as i mentioned earlier, japan's economy is likely to experience a sustained period of expansion albeit at a moderate pace in 2006. there are several factors underlying this economic outlook. the first factor is that overseas economies are likely to continue expanding. japan's exports are expected to continue increasing against the background of this overseas economic expansion. the second factor is that the corporate sector is finally reaching the end of the long path of the postbubble adjustments. firms have almost resolved their " three excesses " in production capacity, employment, and debt. for example, the recently released december tankan ( short - term economic survey of enterprises in japan ) shows that both the number of firms perceiving their production capacity to be insufficient and the number perceiving their holdings of labor to be insufficient have simultaneously exceeded the numbers perceiving them to be excessive for the first time since the bursting of the bubble. furthermore, ratios of firms'outstanding debt to total assets and to sales have been declining not only at large firms but also small and medium - sized firms. while making adjustments in the " three excesses, " firms have responded to economic globalization by reallocating their production bases so as to take advantage of the international division of labor. on the domestic side, they have been reviewing their business lines based on the " selection and concentration " strategy and improving their ability to create high - value - added products and services. as a result, current profits at japanese firms of all industries and sizes increased for fiscal 2004, with profits and the ratio of current profits to sales exceeding those recorded at the height of the bubble era. corporate profits are likely to continue to increase for the fourth straight year in fiscal 2005, while absorbing the cost resulting from high crude oil prices. reflecting high corporate profits, business fixed investment is likely to continue to increase across a wide range of industries. according to the december tankan, not only have large manufacturing firms substantially increased their business fixed investment plans for fiscal 2005, but small and mediumsized firms have also steadily revised their plans upward. as a result, business fixed investment is expected to increase for the third straight year for firms of all industries and sizes. financial institutions have mostly resolved their nonperforming - loan problems, which are inextricably linked with firms'excessive debt, and