Although the government faces two important goals -- shoring up the fragile economy and cutting its enormous budget deficit -- the cap on core fiscal 2004 budget outlays the Cabinet endorsed Friday only increases concern that neither can be achieved anytime soon.
What makes it hard for the government to reach these goals is its failure to effect reforms in key state expenditures, including the country's rising social welfare costs and the central government's huge financial aid to municipalities, economists say.
"The government move to cut spending (via the budget cap) gets attention, but how to reform the budget is still a mystery," said Hideo Kumano, senior economist at Dai-Ichi Life Research Institute.