¥71 trillion cap eyed for ’13 budget but growth plans to drain ¥2 trillion extra

Kyodo

Major policy spending will remain capped at ¥71 trillion ($905 billion) but up to ¥2 trillion will be earmarked to finance an economic growth strategy, according to draft guidelines for the initial fiscal 2013 budget.

The spending, excluding debt-servicing and other costs, will stay at the same level as this year, signaling a focus on maintaining fiscal discipline as public finances deteriorate.

In all, the size of the entire budget will exceed ¥90 trillion.

The guidelines will be approved by the Cabinet on Friday, and ministries and other government offices are to submit their own budget requests to the Finance Ministry by Sept. 7, officials said.

Tokyo normally starts compiling the budget in summer so it can draw up a draft in late December and submit it to the Diet in January.

But this year, the process is being cast into doubt because Prime Minister Yoshihiko Noda plans to call a snap election “soon.” If the election leads to a change of government, the budget compilation process will have to restart from scratch.

The draft guidelines, obtained by Kyodo News, said the government will focus on stimulating growth through enhanced spending on the environmental, medical, and agriculture, forestry and fisheries sectors.

The guidelines will allow government offices to ask for up to ¥4 trillion to finance policy objectives under the economic growth strategy, and the Finance Ministry will then trim the amount to ¥1 trillion to ¥2 trillion after assessing the requests.

Ministries and agencies can call for bigger amounts for specific policies, depending on how much they cut other spending.

Each government office has to reduce general policy spending, which excludes personnel and other administrative costs, by up to 10 percent to secure spending for the growth strategy.

Meanwhile, no upper limit will be set on requests linked to postdisaster reconstruction projects.

On social security, the government will accept about ¥800 billion in additional spending compared with fiscal 2012, when some ¥26.4 trillion was initially set aside. At the same time, the government will proceed with reforms to streamline welfare services.