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Japan '96,97 budget

requests seen up 11.6 pc

TOKYO: Budget requests from Japan's ministries and state agencies for next fiscal year are likely to be 11.6 percent higher than this year's original allocations, the highest growth in seven years, the Ministry of Finance (MOF) said.

Requests for the year starting April 1, 1996, are projected to total 79.19 trillion yen. Budget requests for the current year grew 4.8 percent from the approved 1994/95 budget, excluding later supplementary allocations.

The last time budget requests grew by double digits was in 1990/91, when they rose 11.4 percent.

The double-digit growth for the next fiscal year is mainly due to an expected sharp rise in government debt payments and subsidies to regional governments and agencies, the MOF said.

"We will listen to the requests, decide on priorities and restrain the overall growth," a senior MOF official told reporters.

Given snowballing government debt payments and weak tax revenues due to a prolonged economic slump, the ministry has been stressing the need to curb budget growth. At the same time, it says, Japan must secure enough funds for economic stimulus measures to help the stumbling economy recover.

All budget requests are due in by August 31 and will be followed by marathon negotiations between MOF and the other ministries until the end of December, when MOF usually draws up a draft budget.

If completed and approved as scheduled, the government will put it up for parliamentary debate in January.

Requests for general account spending, the core of the state budget, are seen totalling 43.93 trillion yen, up 4.2 percent from the original 1995/96 budget. On August 4 the cabinet set a ceiling on increases in 1996/97 general account spending of 4.2 percent.

Requests for debt-servicing costs are estimated to be around 17.47 trillion yen, up 32.2 percent. The majority of these costs cover redemptions and interest payments, the MOF said.

Subsidies to regional governments and agencies are estimated to be around 15.92 trillion yen, up 20.5 percent.

Requests for the government's loans and investment programme in 1996/97 financed by postal insurance, postal savings and other public funds and not included in the general account budget are seen totalling 41.54 trillion yen, up about three percent.

On the plus side, funds from postal savings are projected to total some 10 trillion yen in 1996/97, while pension funds are likely to total about 6.60 trillion yen, MOF said.-Reuter