Japan plans to boost defense spending while holding the line on overall budget

Despite a very austere budget proposal for next year, Japanese defense spending will receive a substantial boost. The Japanese Cabinet approved a proposed budget this weekend for fiscal year 1986 which provides for zero growth in general expenditures but a 6.58 percent growth in defense outlays.

The United States has responded favorably to the proposed defense budget but may be disappointed by the likelihood that the overall budget will fail to stimulate the domestic economy.

In Washington yesterday, Defense Secretary Caspar Weinberger called the proposed defense budget very encouraging.

Shortly before the final figures were announced here, US Ambassador Mike Mansfield told reporters that recent percentage increases in Japanese spending compare favorably with NATO levels, but noted that ``we'd like them to do more in their own self-defense.''

The defense expenditure has already drawn fire from leading Japanese newspapers and opposition parties, particularly in the context of cuts in social spending. However, the conservative administration of Prime Minister Yasuhiro Nakasone may avoid some controversy, because the budget still falls just short of the limit of 1 percent of gross national product on defense spending set in 1976.

The defense hike is only slightly less than last year's 6.9 percent increase, and roughly equal when adjusted for inflation. More important, it puts the government on track to fulfill the rate of spending called for in a recently adopted five-year defense buildup plan.

The austerity budget conflicts with the goal of stimulating domestic demand, a policy aimed at relieving trade frictions. The Nakasone administration, says Ambassador Mansfield, ``seems loath to face up to'' the task of stimulation which would mean a larger budget deficit.

Japanese financial institutions are predicting a slowdown in economic growth next year, though government forecasts are more optimistic.

The announcement of next year's budget was accompanied by a planned reshuffle of Nakasone's Cabinet. The foreign, finance, and defense ministers were retained to ensure continuity in key international policy areas.

Only the retention of Defense Agency head Koichi Kato for an unprecedented second term was a surprise to Japanese political observers.