The national government will cut about 1.030 trillion yen in subsidies to local governments in fiscal 2004, while ceding them around 655.8 billion yen in funds they will be able to use at their discretion, the Finance Ministry said Wednesday.
The reduction in subsidies is one of the three reform pillars aimed at changing the flow of funds in the administrative system to promote decentralization and fix the national government's debt-ridden finances.
For government ministries, subsidies have long been viewed as a means of influencing local governments.