Japan Sengoku: Will cut 2010/11 budget to Y92 trln

TOKYO, Oct 18 - Japan wants to keep the size of its national budget for next fiscal year at 92 trillion yen ($1 trillion) by shedding 3 trillion yen from the amount requested by cabinet ministers, a government minister said on Sunday.

Yoshito Sengoku, who is responsible for cutting wasteful spending from national budgets, also vowed to limit Japanese government bond issuance in the fiscal year from April 1 to below the 44.1 trillion yen earmarked for the current fiscal year.

Administrative Reform Minister Sengoku said he will aim to cut 10 percent of projects requested by ministers in two months before the government compiles the next year's budget.

"It is important to cut budget requests with a resolve not to let (JGB issuance) exceed" the 2009/10 level, Sengoku said on Japanese television. "This is my resolution."

Concerns the government will have to borrow more to fund its programmes and to cover a gap in tax revenues due to a recession helped push up JGB yields, as budget requests from cabinet ministers totalled 95.04 trillion yen for 2010/11.

"I want to reduce that to 92 trillion yen," Sengoku said.

The amount would still be far more than the size of this fiscal year's initial budget worth 88.55 trillion yen.

"That would be unavoidable given that previous government had built up so much debt that we now have to repay and that corporate tax revenues have fallen a lot due to the underlying economic structure," he added.

Japanese media earlier reported that Sengoku had said in a speech the previous day that tax revenues this fiscal year might fall below 40 trillion yen, compared with 46 trillion yen estimated, as the economy has barely crawled out its worst recession since World War Two.

Sengoku was quoted by some newspapers as saying that the government would not be able to compile the 2010/11 budget without issuing more deficit-covering bonds.

The Democratic Party of Japan, who took power a month ago after defeating their long-dominant rivals at the polls, have pledged to put more money in the hands of consumers.

But they now face the tough task of keeping key campaign pledges without fanning fears in markets and among the public about further inflating a public debt that is already nearly 200 percent of GDP, the biggest among advanced nations. ($1=90.87 Yen)