Prime Minister Junichiro Koizumi is intent on capping medical expenditures and calling on wealthy senior citizens to bear more of the financial burden for social security, according to a draft version of his economic and fiscal policy seen by Kyodo News on Sunday.

The basic policy on economic and fiscal management is slated to be finalized in late June by the Council on Economic and Fiscal Policy, a high-powered government panel chaired by Koizumi, after publishing a draft on Thursday.

The policy is expected to serve as a guideline for the Koizumi Cabinet, which is determined to implement radical structural reform in all areas of economic activity, including public works and social security.

Japan's medical expenditures, which now total about 31 trillion yen a year, have recently been rising at a faster pace than national income levels, due mainly to the rapid graying of society.

The draft version also includes a proposal to review budgetary appropriations for road development and maintenance as well as to prioritize public works with the aim of curbing overall public works spending.

Priority in public works should be given to urban development, information technology infrastructure, education and research-related projects, while spending should be curbed on roads in areas where there is not much traffic, the draft says.