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The fiscal 2005 budget requests from government ministries and agencies are expected to total 85.52 trillion yen — 3.40 trillion yen greater than the initial budget for the current fiscal year, Finance Ministry sources said Wednesday.

The expected rise in the general-account budget mainly stems from an increase in debt-servicing costs, based on an assumption that long-term interest rates will rise to 2.7 percent from the 2.5 percent assumed in the fiscal 2004 budgetary request, the sources said.

The Finance Ministry plans to cut about 3 trillion yen from the budgetary requests because it wants to cap the general-account budget at around the initial 2004 budget of 82.11 trillion yen.

The budgetary requests are due by Tuesday and the Finance Ministry will draft the fiscal 2005 budget on the basis on the requests. The Finance Ministry budget plan will be unveiled in December.

Of the 85.52 trillion yen, core policy-related outlays will be capped at 48.24 trillion yen, up 610 billion yen from the initial fiscal 2004 budget. That ceiling was approved by the Cabinet in July. Debt-servicing costs are expected to total 20.24 trillion yen, up 2.67 trillion yen, the sources said.

But tax revenue grants for local governments are expected to fall 250 billion yen to 16.24 trillion yen due to reductions in public works projects.

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