Japan approves austere budget

Japan's finance minister says the budget is "close-fisted"

The Cabinet of Japan's prime minister, Junichiro Koizumi, has approved an austere budget plan for the next fiscal year which starts in March.

The draft budget of 81,230bn yen ($630m; £443m) represents a 1.7% cut from this year's initial budget, and is the smallest proposed budget in four years.

"With this fiscal 2002 budget, the administration has made a strong first step towards implementing reforms," Mr Koizumi said.

"We boldly took the initial step of reform-implementation budget."

Mr Koizumi promised sweeping reforms in order to try and revive the stagnated economy when he came to power.

But many critics say his reforms have so far not proved far-reaching enough.

Winds of change

The tight budget has been approved despite calls for extra spending in order to shore up Japan's ailing economy.

The government said that while spending has been cut overall, initial funds have been allocated to areas that will promote structural reform.

Spending on public works will fall by 10% while the money-guzzling state corporations will receive 1,000bn yen less.

Social security costs will be capped and foreign aid programmes trimmed.