Abe calls for further spending cuts in fiscal 2008 budget

Prime Minister Shinzo Abe urged Finance Minister Koji Omi on Wednesday to continue efforts to slash spending in compiling the state budget for fiscal 2008 but stopped short of mentioning a numerical target for the size of a spending cap on core-policy outlays.

''The prime minister instructed me not to ease efforts to cut spending in the budget compilation work, based on economic and fiscal policy guidelines adopted in 2006 and 2007,'' Omi told reporters in the premier's official residence following his talks with Abe.

Omi said Abe also asked him to scrutinize expenditures for truly necessary ones with an emphasis on areas such as boosting economic growth, revitalization of regional economies and education reform.

He said the government's policy of implementing harsh spending cuts remains unchanged despite the defeat of the ruling coalition in Sunday's House of Councillors election.

Asked whether the size of the spending cap on core policy-related outlays will be lower than 46.8 trillion yen under the fiscal 2007 budget, Omi said, ''We will discuss specific figures later.''

He added the government has yet to decide whether it will set a 3 percent cut in public works as it did in the past few years.

The Cabinet is likely to finalize the spending cap by the end of the next week following debates at the government's Council on Economic and Fiscal Policy.

With the spending cap being set, government ministries and agencies will file their budgetary requests later this month. The government is expected to compile the fiscal 2008 state budget in late December.