Japan budget aims to boost rural areas but cut debt

Japan's government on Thursday approved plans for a modest boost to the national budget next year, aiming to reinvigorate ailing rural economies while also reining in the huge public debt. Foreign aid, long a tool of officially pacifist Japan's diplomacy, will be cut for a ninth straight year under the draft budget.
The finance ministry proposed a 0.2 percent rise in the overall budget to 83.06 trillion yen (733.11 billion dollars) for the next fiscal year starting in April, a second straight annual increase.
The government aims to reduce new bond issues as part of efforts to slash the national debt, the highest among major industrialised nations. But pressure is growing within the governing Liberal Democratic Party (LDP) party for a spending boost to try to win back the support of rural voters who deserted the ruling bloc in July upper house elections.
The government emphasised Prime Minister Yasuo Fukuda's objective of pumping up the rural economies, where many voters feel they have missed out on the nation-wide recovery from a decade-long economic slump. "We are trying to reduce the amount of debt," Finance Minister Fukushiro Nukaga told a press conference. "But at the same time, we are also focused on reinvigorating the rural economy and resolving the growth divide between the rural and urban areas," he added.
General expenditure on policy programs will rise 0.7 percent to 47.28 trillion yen, while subsidies to local governments are set to increase by 4.6 percent to 15.61 trillion yen as part of efforts to revitalise rural areas. Social welfare spending will rise 3.0 percent to 21.78 trillion yen to support the growing number of senior citizens.
But spending on public works will be cut by 3.1 percent to 6.73 trillion yen to scale back construction projects that are popular with voters but have left a huge black hole in the public coffers. The planned defence budget was cut for a sixth straight year, by 0.5 percent to 4.78 trillion yen, while funds set aside for official development assistance were reduced by 4.0 percent to 700.2 billion yen. The government aims to curb the value of new bonds issues by 0.3 percent to 25.35 trillion yen.