Prime Minister Ryutaro Hashimoto and his Conference on Fiscal Structural Reform on Sept. 17 endorsed a draft bill that would oblige the government to reduce key expenditures to achieve its self-imposed fiscal reform targets by fiscal 2003.
The bill, which is to be submitted to the fall extraordinary Diet session, outlines spending limits for specific outlays for the years leading up to fiscal 2003, by which time the combined fiscal deficit of the central and local governments is to be pared to 3 percent or less of gross domestic product.
In addition, by that year issuance of deficit-covering bonds is to be terminated, and the degree to which the general account budget relies on bond revenue is to be lower than fiscal 1997 levels.
Hashimoto told the conference that he would like to see the state budget for fiscal 1998, which is currently being compiled, shaped into one that mirrors the government's resolve toward regaining fiscal health, with close scrutiny given to spending items.
He added that the problems which remain -- namely the issue of how to settle the debts left behind after the privatization of the Japan National Railways and the overhaul of the national forestry service -- should be tackled by a subcommittee.
The draft places caps on spending by sector in such areas as defense, public works, official development assistance and social security. It also requires the finance and home affairs ministries to calculate and make public the deficit-to-GDP ratio every fiscal year so annual progress will be visible. The draft includes a provision saying the government would be able to review spending and take additional fiscal reconsolidation steps if it considers them necessary to meet the targets.