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Economy

Hidden costs complicate Japan's effort to rein in budget

Cost of programs such as free preschool still unknown

Finance Ministry staff check over fiscal 2018 government budget requests on Thursday, the submission deadline.

TOKYO -- With price tags on a number of major initiatives still up in the air, Japan's already difficult effort to whittle down its 101 trillion yen ($917 billion) in budget requests for fiscal 2018 has gotten that much tougher.

Thursday marked the cutoff for ministries to submit their requests to the Ministry of Finance, which will now begin hunting for costs to cut. The final version of the budget is expected at the end of December.

The administration of Prime Minister Shinzo Abe hopes to continue a streak of reducing government debt issuance through fiscal consolidation. The goal now is to compress the budget to 98 trillion yen, but the pressure to increase spending will be greater than first thought.

The foremost item without a price tag is a plan to offer free preschool. In its request, the education ministry said it would "proceed gradually while estimating [the costs of] preparing the environment and securing resources" for the program. Making preschool and early childhood care completely free would require as much as 1 trillion yen. Debate on who exactly the program would target and the specific methods it would employ is expected to continue through year's end.

A ruling Liberal Democratic Party committee arguing for expanding support to child-rearing households described in May the importance of offering funding for such care. Some in the government and the LDP say concrete steps, such as expanding nurseries and other child care services, ought to take priority over providing cash. The Ministry of Health, Labor and Welfare has requested 50 billion yen to expand day-care for slots 90,000 children in fiscal 2018.

Another as-yet-unpriced item is public financial support for municipalities that have held down nursing care costs. The idea goes that starting in fiscal 2018 the central government would provide aid to cities, towns and villages that show progress in reducing per-person nursing care costs through the use of independent support mechanisms. Growing social security costs may create a need for tens of billions of yen in additional resources.

(Nikkei)

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