The government plans to limit fiscal 2007 general expenditures to about 46.8 trillion yen, down from 47.5 trillion yen in the fiscal 2006 budget request guidelines and marking the lowest level in nine years, Finance Minister Sadakazu Tanigaki said Wednesday.
The 46.8 trillion yen cap, however, is still up from the 46.4 trillion yen in general expenditures that went into the initial fiscal 2006 budget, suggesting the government may be planning to trim more during the budget compilation process.
The Finance Ministry is speeding up work to finalize the budget request guidelines — its ceiling on general expenditures — so Prime Minister Junichiro Koizumi’s Cabinet can approve them Friday. General expenditures is a broad category of policy-related discretionary spending that excludes compulsory costs, including debt servicing and tax grants to local authorities.
Ministries and government agencies will use the ceiling as a guide to draw up their budgetary requests. The Finance Ministry will take the requests until the end of August and then use them to draft next year’s budget, to be finalized in December.
Tanigaki and Health, Labor and Welfare Minister Jiro Kawasaki agreed Tuesday to curb projected growth in social security spending — estimated at 770 billion yen for fiscal 2007 — by 220 billion yen in fiscal 2007.
It would be the fifth straight year that expected growth in social security outlays is being curbed by 220 billion yen when the Finance Ministry draws up budget request guidelines for the next fiscal year.
According to Tanigaki, 2007 budgetary requests for pensions, medicine and nursing care — which account for more than 40 percent of general expenditures — are expected to reach 21.1 trillion yen, up 550 billion yen from the initial fiscal 2006 budget.
While the government is determined to curb rises in social security spending to help cut the government’s debt-ridden finances, increases in government spending on pension, medicine and nursing care is believed to be inevitable with the aging of the population.
Official development assistance outlays will be reduced 3 percent from the initial budget for this fiscal year for the eighth-straight year of cuts.
Tanigaki said he had agreed in a meeting with Foreign Minister Taro Aso earlier in the day on cutting ODA when they discussed general expenditure guidelines for the fiscal 2007 budget.
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