The Cabinet on Friday adopted a draft budget for fiscal 2005 worth 82.18 trillion yen, up 0.1 percent from the initial budget for fiscal 2004.

The government is anticipating that an increase in tax revenues from a recovery in corporate performances will help it reduce the amount of fresh bonds it will be required to issue.

But the amount of outstanding bonds, including those issued to refinance existing bonds, will nevertheless grow, leaving the nation highly dependent on debt.

The draft budget will be submitted to the Diet session to start in January.

For the first time in three years, the draft is calling for a reduction in general expenditures. The figure earmarked for fiscal 2005 is 47.28 trillion yen, down 0.7 percent from the initial budget for fiscal 2004.

The government anticipates a 5.4-percent increase in tax revenues, marking the first year-on-year increase in four years.

A total of 44 trillion yen is expected to be raised through taxes in fiscal 2005.

The increased revenues will help reduce issuances of new government bonds, which are slated to fall by 2.2 trillion yen year on year in fiscal 2005 to 34.39 trillion yen.

While the boost in tax revenues will slow the speed of debt expansion, outstanding government bonds are expected to be worth 538 trillion yen at the end of fiscal 2005.(IHT/Asahi: December 25,2004)