The government plans to increase the state budget in fiscal 2005 to 82.2 trillion yen, up slightly from the initial budget of 82.1 trillion yen requested for fiscal 2004, due partly to a rise in debt-servicing costs, Finance Ministry officials said Friday.

The government plans to set debt-servicing costs at about 18.5 trillion yen for the fiscal year beginning next April, which is less than what it initially sought but more than the 17.6 trillion yen initially budgeted for the current fiscal year, the officials said.

Among other points under the budget plan, the Finance Ministry and the Internal Affairs and Communications Ministry are considering cutting tax grants for local governments by 400 billion yen to 16.1 trillion yen, with the former calling for drastic cuts but the latter opposing them.

The tax grants are given out to local governments to cover costs that cannot be financed by their own revenues.

The Finance Ministry is putting the final touches on a draft state budget for fiscal 2005 to be announced Monday. The Cabinet will approve the draft budget plan on Dec. 24 after fine-tuning the draft.

The ministry plans to set next fiscal year's general expenditures at 47.3 trillion yen, down from the 47.6 trillion yen initially budgeted for this fiscal year, the officials said.

A planned cut in general spending, the core of the nation's general account, stems from a 3 percent trim in outlays for public works projects and a 1 percent reduction in defense spending, they said.

Also contributing to a fall in spending is a planned 1.1 trillion yen reduction in government subsidies to municipalities in fiscal 2005 as part of a three-part reform to give greater fiscal autonomy to local governments, including tax hikes.

Tax revenues are meanwhile expected to total some 44 trillion yen in fiscal 2005, up from 41.7 trillion yen initially projected for the fiscal 2004 budget.