Savings to be used to cover increases in social security spending

Cabinet approves 10% cap on budget requests for ’12


Staff Writer

The Cabinet on Tuesday approved a plan to cap budget requests for fiscal 2012 and keep total general account spending — excluding debt-servicing costs — to less than ¥71 trillion, while allocating about ¥700 billion for special policy measures to boost economic growth.

The guidelines ask all ministries to cut policy spending requests by 10 percent in the next fiscal year. However, they don’t apply to obligatory outlays, such as government payroll costs, tax revenue transfers to local governments, and social security costs.

The money saved from the 10 percent cuts would mainly be used to cover anticipated increases in social security spending, the Finance Ministry said.

Meanwhile, issuance of new government bonds will be limited to ¥44 trillion, the same level as in fiscal 2011.

Spending related to rebuilding the devastated northeast and compensation for hepatitis B patients who have sued the government will be handled separately from the budget caps.

“We will aim to create a budget plan that makes necessary cuts and puts priority on urgently needed policies,” Finance Minister Jun Azumi told reporters.

The budget request caps are in line with the middle-term fiscal policy plan released by the government in August, which aims to turn around the primary budget balance by 2020.

Azumi added that the budget will target the three most pressing issues facing the country — restoring the disaster-hit Tohoku region, bringing the Fukushima nuclear crisis under control and negating the strong yen’s impact on the economy.

The ¥700 billion intended to spur economic growth will be used to fund policies such as creating new jobs, developing renewable energy technologies and revitalizing local economies.

Following the approval of the budget caps by Prime Minister Yoshihiko Noda’s Cabinet, all ministries will be asked to submit their funding requests for next year by the end of this month.

But the Cabinet will be hard pressed to approve the final budget draft by the end of December, with the process already a month behind schedule due to work on a third extra budget for fiscal 2011 and former Prime Minister Naoto Kan’s resignation in August.