Finance Minister Sadakazu Tanigaki on Monday proposed a draft budget for fiscal 2005 worth 82.18 trillion yen, up 0.1 percent from the initial 2004 budget, as higher debt-servicing costs outpaced cuts in discretionary spending.
"An utmost effort to cut costs" by the Finance Ministry just managed to offset rising social security costs as Japan ages, keeping next year's budget at around the same size as this year's, Tanigaki said.
But the budget plan fails to make significant cuts in expenditures, and makes it clear that the government is headed toward restoring fiscal balance mainly through tax increases, said Yasunari Ueno, chief market economist at Mizuho Securities Co.