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A House of Councilors panel approved an administrative reform promotion bill Thursday aimed at downsizing the government, one of the pillars of Prime Minister Junichiro Koizumi’s reform drive.

The bill, touted by the government and the ruling parties as the most important piece of legislation in the current Diet session, is expected to be passed by and enacted in the Upper House plenary session Friday.

The reform bill stipulates medium-term steps for Japan to downsize its huge bureaucracy, including a 5 percent net cut in government officials by the end of fiscal 2010 and consolidation of four state-run financial institutions into a single body in fiscal 2008.