Japan plans to trim overall spending on defense and overseas aid as part of efforts to get its huge public debt under control, but will boost outlays on ballistic missile defense to cope with a growing threat from North Korea.
It is the first budget under Prime Minister Shinzo Abe, who has said his focus would be on stimulating economic growth and not the fiscal belt-tightening of his reformist predecessor Junichiro Koizumi.
Japan's defense spending will fall by 0.3 percent to ¥4.798 trillion (US$40.7 billion) in in the year from April 1, compared with this year's ¥4.814 trillion, according to a draft budget released by the Finance Ministry yesterday.
The budget includes measures such as rationalizing equipment procurement in a bid to trim costs, but also boosts spending aimed at responding to regional security risks and possible terrorist attacks.
Money for ballistic missile defense systems will increase sharply by 30.5 percent from the current year to 182.6 billion yen because of rising threats from North Korea, a finance ministry official said.
Abe has built his career on taking a hard line on North Korea and has vowed to rewrite the nation's US-imposed 1947 Constitution in which Japan renounced war.
Spending for guarding against possible terrorist and guerrilla attacks will rise 9.2 percent to 81.1 billion yen.
The draft budget also earmarks 7.2 billion yen for a planned relocation of US troops from Japan to Guam, part of a broader reorganization of US forces globally.
Most of the budget negotiations were held before parliament passed bills last week to upgrade the Defense Agency to a full-fledged ministry next year.
The change in the ministry's status will enable it to take direct charge of requesting the annual military budget.
Japan's defense spending is around the world's fourth highest after the US, China and Russia.
The pacifist Constitution has limited Japan's military forces to a low profile at home and abroad.
The draft also showed the general account budget for official development assistance (ODA) will decline 4 percent from this year to ¥729.3 billion, the lowest since the 1988-1989 fiscal year.
Japan is still on course to achieve its self-imposed goal of increasing net overseas aid by US$10 billion over the five years to 2009, a finance ministry official said.
The blueprint for the budget, totalling ¥82.91 trillion, goes through last-minute negotiations among ministries this week and will be made into an official government draft after minor modifications.
The final draft is expected to be approved by the Cabinet on Sunday and will be submitted to parliament early next year.
Japan's public debt is the highest among industrialized nations after the government spent trillions of yen on emergency spending packages to haul the economy out of its deflation doldrums in the 1990s.
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