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The Council on Economic and Fiscal Policy proposed Friday earmarking some 2 trillion yen for seven key areas under Prime Minister Junichiro Koizumi’s reform blueprint when the panel draws up budgetary ceilings for fiscal 2002 next week.

The key panel also aims to reduce spending for low priority areas, which will likely include public works and official development assistance, as much as 5 trillion yen.

As a result, the government will seek to cut around 3 trillion yen from its projection of fiscal 2002 expenditures, economy minister Heizo Takenaka told a news conference after the meeting.

This is to deliver on Koizumi’s promise to limit issuance of government bonds to under 30 trillion yen so the government can distance itself from debt-oriented budget-making.

According to Finance Ministry projections on the nation’s medium-term fiscal state, the government will have to issue bonds next year worth 33.3 trillion yen to supplement revenue shortage.

The Cabinet is expected to adopt the budgetary guidelines on Aug. 10 and ministries will submit their budget requests to the Finance Ministry at the end of the month.

The fiscal 2002 budget focuses on seven key areas — including information technology, urban redevelopment and the environment — where government spending is expected to stimulate private-sector demand.

Other priority areas include science and human resources, revitalizing local communities and dealing with the declining birthrate.

Reducing 5 trillion yen from budgetary requests is expected to face enormous hurdles.

Finance Minister Masajuro Shiokawa has said he would like to see a 10 percent cut to public works spending and official development assistance.

Takenaka said there was no discussion during Friday’s meeting on numerical targets for specific areas.

The calculation is only a tentative idea and that the plan’s feasibility has yet to be studied by the Finance Ministry, he said.

At the meeting, panel members agreed on the need to abolish special allocations treated as exceptions to budgetary limits, Takenaka said.

Under the exceptional allocations system, which began in fiscal 1995, funds are set aside for flexible use to finance special programs. This year, 700 billion yen has been set aside for programs to be promoted by the prime minister and 300 billion yen for the three-party ruling coalition.

But these funds are under fire because the line between special programs and other policy measures is unclear.

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