Japan to Cut Spending 1.8% Next Fiscal Year

Japan said it will cut general budget spending by 1.8% in the next fiscal year, the first decline in four years, as the government laid out details of Prime Minister Junichiro Koizumi’s plan to rein in public finances.

A government panel overseeing the budget for the year starting April 1, 2002, agreed to reduce general budget spending, which excludes debt-servicing costs and subsidies to local governments, to about $388.2 billion, economic and fiscal policy minister Heizo Takenaka said. He said caps on welfare spending increases will help meet that goal.

The cuts are needed to meet Koizumi’s pledge to cap new bond sales next fiscal year to reduce government debt, forecast to reach about $5.39 billion--equal to 130% of gross domestic product--by March.

The budget guidelines will be formally approved by Koizumi’s cabinet today.