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Japan Draft Budget Cuts Borrowing to a Ten-Year Low

Japan unveiled a draft budget Wednesday that cuts new borrowing to the lowest level in ten years, thanks largely to a huge increase in tax revenues on the back of an economic recovery.

The first budget by Prime Minister Shinzo Abe also seeks to limit overall government spending to pave the way for fixing Japan's public finances, now in the worst condition among major industrialized countries.

The draft put forward by the Ministry of Finance plans Japanese government bond issuance of 25.43 trillion yen ($215.6 billion) in the fiscal year starting from April, the lowest level since fiscal 1997/98.

Debt issuance was reduced by 4.54 trillion yen from 29.97 trillion yen planned in this year's initial budget, the largest reduction ever. "I think we were able to show people at home and abroad our intention of maintaining fiscal discipline," Abe said Tuesday.

Abe, in his first budget, may have wanted to allay suspicions that he might not be as committed to fiscal belt-tightening as his predecessor Junichiro Koizumi, some analysts said.

The total size of the budget runs to 82.91 trillion yen, up 4.0% from this year's initial budget of 79.69 trillion yen.