The Council on Economic and Fiscal Policy approved Tuesday the guidelines for budgetary requests for fiscal 2003, capping outlays at 48.1 trillion yen.

The total will eventually be slashed to 47.5 trillion yen -- or "effectively lower" -- in the process of compiling the budget toward the end of the year, Heizo Takenaka, minister in charge of economic and fiscal policy, said after the panel met.

The Cabinet was expected to approve the guidelines Wednesday.

Under the guidelines, budget requests for public investment, one of the main pillars of general expenditures, are capped at 9 trillion yen, 3 percent lower than the 9.3 trillion yen earmarked in the initial budget for the current fiscal year.

Budgetary requests for discretionary spending, which cover major policy-related outlays, are capped at 5.4 trillion yen, 2 percent lower than the 5.5 trillion yen in the initial fiscal 2002 budget.

Discretionary spending includes official development assistance and funding for science and technology.

Although no ceiling on budgetary requests for ODA is specified, the Finance Ministry plans to strictly review the ODA budget in line with the policy detailed by the government in June.

Expenditures for science and technology are exempt from the 2 percent cut because the field is deemed important to the nation's future. Spending in this sector totaled about 1 trillion yen for the current fiscal year.

The ministry will accept budget requests for public investment and discretionary spending of 20 percent more than this amount to ensure that ministries and agencies can come up with innovative policy measures, Takenaka said.

Mandatory expenditures, which cover pensions and personnel costs for government employees, are set at 33.7 trillion yen, up some 900 billion yen from 32.8 trillion yen in the fiscal 2002 initial budget.

In terms of mandatory spending, expenditures for pensions and medical costs are expected to increase by 910 billion yen from the current fiscal year if existing systems are maintained.

Under the approved budget request guidelines, the increase in expenditures is to be reduced by 220 billion yen, to total 690 billion yen, by reviewing related systems.

Despite anticipated increases in other areas of mandatory spending, the cap for total mandatory expenditures for fiscal 2003 has been set at 33.7 trillion yen.