The Cabinet on Tuesday approved a sweeping reform program compiled last week by a key government panel that aims to revive the economy in two to three years through a fundamental cleanup of banks' nonperforming loans and a thorough review of the state budget.

The reform program, finalized Thursday by the Council on Economic and Fiscal Policy, sets the next two to three years as an intensive adjustment period for economic revival, during which Japan must endure low economic growth.

Regarding the budget-making process for the next fiscal year, Finance Minister Masajuro Shiokawa told a news conference that the Finance Ministry will strive to prepare guidelines for budget requests from government ministries and agencies so the Cabinet can approve the guidelines on Aug. 10.

Budgetary requests

Prime Minister Junichiro Koizumi's economic reform panel should set out budgetary request guidelines for the fiscal 2002 budget, Heizo Takenaka, state minister in charge of economic and fiscal policy, said Tuesday.

"The Council on Economic and Fiscal Policy is a place of discussion on a broad framework for the budget, so it should be responsible for a basic policy on budgetary requests," Takenaka told a regular news conference.

Takenaka stopped short, however, of explaining how such guidelines should be determined.

The comments came a day after Vice Finance Minister Toshiro Muto said the council will compile a framework for budgetary requests made by ministries and agencies. The framework, to be ready for fiscal 2002, will be based on a Finance Ministry proposal.

Muto had said the framework should be compiled before the traditional mid-August holidays.

Ministries and agencies usually submit their budgetary requests in late August.