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Japan new cabinet targets waste, to keep stimulus
Fri Sep 18, 2009 2:33am EDT
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By Hideyuki Sano and Linda Sieg
TOKYO (Reuters) - Japan's new prime minister ordered the cabinet on Friday to root out wasteful projects in a $154 billion extra budget crafted by his predecessor, but his deputy stressed the aim was to redirect stimulus spending, not cut it.
Opinion polls showed a stunning three-quarters of Japanese voters support Prime Minister Yukio Hatoyama's new cabinet, which took office on Wednesday after the ouster of the long-ruling Liberal Democratic Party (LDP).
But Hatoyama is under pressure to make good quickly on the Democratic Party of Japan promises to focus spending on consumers, cut waste and reduce bureaucrats' control over policy.
New Finance Minister Hirohisa Fujii told reporters he aimed to find several trillion yen in savings from the review of the 14 trillion yen ($153.4 billion) budget, adding this could result in less government bond issuance for the year to next March 31.
But he stopped short of specifying the amount of a possible cut in the total 44.1 trillion yen worth of Japanese government bond issuance planned for 2009/10.
Deputy Prime Minister Naoto Kan, who heads a powerful new strategy bureau charged with setting policy priorities, signaled the government's commitment to break with old ways.
"Under past Liberal Democratic Party governments, ministers got lectures from bureaucrats based on the interests of each ministry and based on that ... made various demands," he told a news conference.
"Under our party, or rather, the Hatoyama cabinet, ministers themselves are already showing a stance ... based on the interests of the people rather than ministries' interests."
In a sign the government meant to keep its campaign promises, Transport Minister Seiji Maehara on Thursday told reporters that two costly and long-planned dam projects may be scrapped.
Kan, a former Democratic Party leader, is in charge of a new National Strategy Bureau that will also oversee the budget process. He will have to liaise closely with Fujii and other key ministers, although no one is quite sure how that will work.
REFOCUS SPENDING, NOT CUT
Hatoyama's pledge to cut wasteful spending has raised some concerns that the surgery on the extra budget would decrease stimulus needed to ensure Japan's nascent recovery from its worst recession since World War Two stays on track.
Kan sought to allay such concerns. "We are paying attention to the economy. It is not correct to say we are going to freeze spending. We will be reallocating it."
The Bank of Japan has upgraded its assessment of the economy, as exports and output bounced back from a steep fall triggered by the global crisis.
But Japan's jobless rate hit a record high of 5.7 percent in July, the economy has been hit by deflation, and analysts warn that the incipient recovery is largely due to the temporary effects of global government stimulus steps. Continued...
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