Japan cabinet approves US$685.3b draft budget for fiscal 2006
(AP)
Updated: 2005-12-24 11:18

Japan's Cabinet on Saturday approved a 79.69 trillion yen (US$685.3 billion; euro577.5 billion) draft budget for fiscal 2006 that would slash new bond issues to below 30 trillion yen (US$268 billion; euro217.5 billion) for the first time in five years, a government official said.

The plan, which is 2.5 trillion yen (US$21.5 billion; euro18.1 billion) smaller than the current fiscal year's main budget, would fall below 80 trillion yen (US$687.9 billion; euro579.9 billion) for the first time in eight years, reflecting government efforts to trim its spending, prime minister's spokesman Yu Kameoka said.

General expenditures, a broad category of discretionary spending that excludes compulsory costs such as debt servicing, would be 46.37 trillion yen (US$398.7 billion; euro336.1 billion), down 916.9 billion yen (US$7.9 billion; euro6.6 billion) from the previous year.

The proposed budget also includes cost for joint missile shield development with the United States.

A budget bill will be presented to Parliament for debate and approval in January.

The austere plan would enable the government to lower bond issues in the next fiscal year by 4.42 trillion yen (US$38 billion; euro32 billion) to 29.97 trillion (US$257.7 billion; euro217.2 billion), the biggest cut on record, according to the Finance Ministry.

The draft budget shows the government is stepping up efforts to slash the nation's huge fiscal debt and improve its fiscal position.

Japan's combined outstanding central and local government debt is expected to stand at around 150 percent of gross domestic product at the end of the fiscal year ending March 2007, the highest among major industrialized nations.

The draft budget also cuts defense spending 0.9 percent, and trims public works projects by 4.4 percent.