Japan to ask ministries for 10 pct spending cuts-Nikkei

(For more stories on the Japanese economy, click [ID:nECONJP])

TOKYO, July 24 (BestGrowthStock) – Japan’s government will ask
ministries to cut spending by 10 percent in the next fiscal
year’s budget to redirect money to support industries with
growth potential, the Nikkei newspaper said on Saturday.

The request will be made in full budget guidelines to be
set down at a cabinet meeting on Tuesday, although approval may
be delayed as senior government officials remain divided on
some areas of the guidelines, the paper said.

In an outline of the budget guidelines released on July 20,
the government said it would cap spending and new bond issuance
in next year’s budget at this year’s level — about 71 trillion
yen. [ID:nTOE66J03T]

But hitting the targets would be tough as the government
needed to cover social welfare costs, which rise by 1.3
trillion yen ($14.9 billion) each year.

The government’s request to cut spending will exclude the
increased welfare costs as well as payouts to minicipal
governments and expenditure pledged by the ruling Democratic
Party for child benefit.

The spending cuts will generate roughly 2 trillion yen.

Based on the budget guidelines, ministries will submit
spending requests to the government by the end of August. A
draft budget for next fiscal year, beggining in April 2011,
will be decided by the end of this year.

Japan is saddled with a public debt equivalent of twice the
$5 trillion economy, by far the biggest in the developed world.

Credit agencies have warned of possible downgrades of
Japan’s debt rating after the ruling party suffered heavy
losses in an upper house election this month potentially
hurting its efforts to rein in the budget deficit.

Stock Market Money
(Reporting by Leika Kihara; Editing by Ron Popeski)

Japan to ask ministries for 10 pct spending cuts-Nikkei