Japan on track for approval of FY 2010 budget draft this week+

TOKYO, Dec. 23 Kyodo - Prime Minister Yukio Hatoyama's Cabinet managed to reach consensus Wednesday on how to finance many of its key policies, laying the groundwork to approve the fiscal 2010 budget draft this week, possibly Friday evening.

Finance Minister Hirohisa Fujii held talks with several ministers to settle
numerous outstanding issues, including what to do with tax grants to local
governments, healthcare outlays and new child benefits in the fiscal year
starting in April.
Reflecting the Cabinet's aspiration to strengthen assistance for regional
economies, Fujii and internal affairs minister Kazuhiro Haraguchi agreed to
allocate about 16.89 trillion yen in tax grants to municipalities, up 1.07
trillion yen from fiscal 2009.
An increase of more than 1 trillion yen will be the first time since fiscal 1999.
The Democratic Party of Japan, the largest of the three ruling coalition
government, and the Finance Ministry have been eager to trim unnecessary
expenditures amid a shortfall in tax revenues.
But Fujii ended up deciding to allow also an increase in remuneration for
medical services in line with the health ministry's request.
Fujii and health minister Akira Nagatsuma agreed that the government will raise
the overall remuneration rate -- combining fees of medical treatment and drugs
-- by 0.19 percent.
Senior Vice Finance Minister Yoshihiko Noda told reporters that the increase,
the first in 10 years, will require 17 billion yen in national fiscal
resources.
A large portion of about 570 billion yen in fresh funds for medical services
will be allocated to the fields of emergency care, obstetrics and pediatrics,
as pledged by the DPJ during the last election in August.
But Fujii and Nagatsuma decided to lower the authorized price standard of
pharmaceutical products by around 500 billion yen.
After the modification, a corporate employee with an annual income of 3.74
million yen needs to pay 285 yen more than now a year for public health
insurance, in addition to an additional cost of 7.8 yen on average each month
to get outpatient treatment, according to estimates of the Ministry of Health,
Labor and Welfare.
Noda said the government is making final arrangements on the size of the
upcoming fiscal year's budget, such as studying how much it can take advantage
of untapped money in special accounts.
General-account budgetary requests, submitted by ministries and agencies in
October, reached a record 95.04 trillion yen, despite the DPJ's desire to slash
wasteful spending.
DPJ ministers are trying to reduce the size to around 92 trillion yen -- though
still a record level -- while expressing confidence that the Cabinet will meet
its goal of completing the drafting process by the end of this week, before
Hatoyama leaves Sunday for an official trip to India.
Of the planned sum of the general-account budget, about 53 trillion will likely
be core policy-related outlays, also to reach an all-time high.
As national tax revenues in fiscal 2010 are likely to stay stagnant at around
37 trillion yen, the government has so far decided to tap about 10 trillion yen
from non-tax receipts.
On Thursday, the government and the ruling parties are scheduled to convene a
working team to have their final tune-up for the drafting process.
The DPJ's two junior coalition partners, the Social Democratic Party and the
People's New Party, have been urging that the government raise at least 15
trillion yen from non-tax receipts, such as through tapping special-account
reserves.
The two junior parties are also demanding that the forthcoming budget be bigger
than 95 trillion yen, unlike the DPJ.
==Kyodo