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The ruling Liberal Democratic Party and the Liberal Party agreed Tuesday to increase the fiscal 1999 budget for public works projects and expand the government’s pecuniary aid to support families with three children or more, according to senior officials from both parties in charge of policy affairs.

However, the two parties failed to narrow differences over major issues like tax reform, pension programs and whether to start the new elderly care insurance system.

The remaining issues were to be discussed Tuesday night between LDP policy affairs chief Yukihiko Ikeda and his Liberal Party counterpart, Takeshi Noda.

Measures involving pension programs and elderly insurance are to be taken up by the two parties today. The Liberal Party demanded that elderly care be funded not by an insurance system but by tax revenue.

Such issues as a reduction in the number of ministers, which the Liberal Party has been calling for, will be discussed at a top level meeting between Prime Minister Keizo Obuchi and Liberal Party leader Ichiro Ozawa to be held as early as Saturday, it was agreed Tuesday by secretaries general of the two parties.

At Tuesday’s meeting of deputy policy affairs chiefs, the two parties agreed to create a new reserve fund for public works projects to stimulate the nation’s ailing economy. They also agreed to set aside the same amount of funds for public investment as allocated during fiscal 1998, including a series of supplementary budgets.

After the third supplementary budget is implemented, the fiscal 1998 budget for public works projects is expected to reach 14.85 trillion yen.

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