The Liberal Democratic Party's administrative reform panel drafted a policy proposal Wednesday to reform special government accounts in a bid to secure some 20 trillion yen to strengthen the state's deficit-ridden finances.

At present, 31 special accounts have surpluses and reserve funds worth a combined 45 trillion yen. The proposal calls for cutting that sum by 20 trillion yen within the next five years.

The drafted policy, endorsed by the LDP's Administrative Reform Promotion Headquarters, envisions, for example, consolidating the five separate accounts for road, river, harbor and airport improvements and the financing of urban development into a single account by fiscal 2008.

The 20 trillion yen in cuts includes 12 trillion yen to be drawn down from reserves in the special account for treasury loans in fiscal 2006, which would be used to pay back government debt.

The proposal will be included in an administrative reform promotion bill the government plans to submit to the ordinary Diet session convening in January, with a view to passing legislation consolidating the special accounts in fiscal 2007.

The envisioned law would do away with the legal stipulation that allows government ministries with jurisdiction over the special accounts to boost outlays from them as much as they like. It is hoped the law will also improve transparency and efficiency in the use of funds by unifying accounting and information disclosure standards.

It will also stipulate more stringent conditions for setting up a special account, and have a clause that calls for a review to see whether existing special accounts are necessary.

In addition to the five accounts to be merged, the LDP panel also agreed to amalgamate the special accounts for welfare insurance and the national pension by fiscal 2007.