Japan FY 2010 budget requests total record 95 tril. yen

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TOKYO, Oct. 16 Kyodo -
Japan's general-account budget for fiscal 2010 on a request basis reached an
all-time high of 95.04 trillion yen, amid rising expenses for social welfare
and debt servicing, the government said Friday.
The amount, far more than Prime Minster Yukio Hatoyama had hoped for, compares
with the initial budget of 88.55 trillion yen for fiscal 2009, penned by the
previous government, and the previous request-basis record of 89.15 trillion
yen for fiscal 2004.
''We will make further cuts'' by looking carefully at all requests submitted by
ministries and agencies, Hatoyama, who assumed office one month ago, told
reporters. ''Our fight will continue.''
The government also said Friday it will freeze 2.93 trillion yen of the 14.70
trillion yen extra budget for fiscal 2009, enacted in May.
Hatoyama's Cabinet would redirect the money to fund its own programs aimed at
boosting disposable household income, unlike its predecessor that invested in
large public works to stimulate the flagging economy.
The record request amount for next fiscal year came after the Democratic Party
of Japan-led government had advised all ministries and agencies not to seek
more than they received in the initial budget for the current fiscal year
through March 31.
Of the 95,038 billion yen sought in total by central government offices, the
Cabinet managed to cut about 1.3 trillion in expenditures for existing
projects.
Among other items, the new government axed expenditures for construction works
and projects deeply connected to the vested interests of the Liberal Democratic
Party, which enjoyed more than half a century of nearly unbroken rule before
suffering a crushing defeat to the DPJ in the Aug. 30 general election.
In addition, Hatoyama's Cabinet has so far apparently succeeded in wresting
control over arranging budgetary matters from Japan's powerful bureaucracy.
But as a whole, the DPJ could not achieve the steep cuts it had hoped for to
offset a big increase in spending for its election promises, such as providing
allowances to families with children and abolishing tolls for expressways.
Implementing the pledges in fiscal 2010 requires about 7.1 trillion yen, of
which 4.38 trillion yen has been earmarked under the requests.
Of the total amount of requests, core-policy related outlays expanded to about
54.99 trillion yen, compared with a record 51.73 trillion yen allocated in
fiscal 2009.
With Hatoyama accepting the reality of the situation, the focus will now be on
how much the new government will be able to trim from the inflated requests in
the course of drafting the budget for the year starting in April.
Finance Minister Hirohisa Fujii said to reporters he told Hatoyama that he will
''definitely cut back'' on the amount when briefing the prime minister on the
latest budget figures. ''Things can't remain as they are.''
The government has promised to finish the drafting process by the end of this
year.
But Hatoyama has a tough road ahead to raise money for programs promised by the
DPJ without making the budget bigger than the current year's initial budget,
considering that some ministries stopped short of putting down a figure for
their key programs worth a total of several trillion yen when they submitted
their requests to the Finance Ministry on Thursday.
The DPJ-led government, which has pledged to eliminate wasteful use of
taxpayers' money, also needs to grapple with the ballooning deficit, already at
the highest level among industrialized countries.
Japan's debt-servicing costs are expected to reach 21.89 trillion yen in the
fiscal 2010 budget, up 8.1 percent from the initial budget for the current
fiscal year, as the amount of outstanding government bonds is ballooning amid a
sharp fall in tax revenues resulting from a serious economic slump.
The issuance of government bonds for the current fiscal year will already reach
a record 44.1 trillion yen, while there is a possibility that tax revenues,
once projected to total about 46.1 trillion yen, may fall below 40 trillion yen
for the first time since fiscal 1985 if the economy does not pick up
dramatically in the months ahead.
Senior Vice Finance Minister Yoshihiko Noda said the revenue fall is ''due to
the great global recession'' and the government ''can't avoid issuing
additional bonds'' on top of the planned 44.1 trillion yen worth as it will
possibly draw out the second supplementary budget later this fiscal year.
Against this backdrop, Japan's fiscal 2009 budget, as well as that for fiscal
2010, may be forced into unusual circumstances of being financed more by debt
than revenues.
But Noda, who briefed reporters on the total sum of the budgetary requests,
said the DPJ-led government will stick to its policy of not issuing
debt-covering bonds worth more than 44 trillion yen to fund the fiscal 2010
budget.
==Kyodo