Japan's Kan at odds with Fujii over extra budget

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TOKYO, Nov 13 (Reuters) - Japanese National Strategy Minister Naoto Kan said on Friday that some items in an extra budget the government is considering to support the economy could be cut from the main budget for next fiscal year.

Kan's comments conflict with those of Finance Minister Hirohisa Fujii, who told reporters on Wednesday that all of the spending allocated to an extra budget should be cut from the main budget for the fiscal year from next April. [ID:nSP347977]

Kan heads the National Strategy Bureau, a new agency under the Democratic Party-led government that is responsible for long-term economic and fiscal policy.

The clash between Kan and Fujii could foreshadow confusion about the budget process as the National Strategy Bureau and the Ministry of Finance tussle for control of fiscal policy.

"No one from the Ministry of Finance has told me anything about this matter," Kan, who is also deputy prime minister, told reporters after a cabinet meeting.

"The National Strategy bureau is responsible for presenting the overall direction of the budget process. In order to quickly decide and implement an extra budget, there may be some things that we don't need to include in the main budget."

The Democratic Party, which won control of the government in a national election in August, has frozen 2.9 trillion yen ($32 billion) from a special budget the previous government compiled as the Democrats say that spending is wasteful.

Cabinet ministers have said they are open to using some or all of that money for an extra budget but have so far been unclear on when they will make a decision. Due to issues of timing, the actual amount available me be 2.7 trillion yen, Kan said on Friday. The Democrats rode to power with promises to focus spending on the household sector and devote less money to public works. But their spending plans have stirred concerns that the party lacks fiscal discipline after Prime Minister Yukio Hatoyama's cabinet submitted a record 95 trillion yen in budget requests for fiscal 2010/11. The government is now cutting spending projects from initial budget requests. Still, investors are on edge about how the Democrats will fund their ambitious spending plans given the country's debt burden, which is the worst among major economies. (Reporting by Stanley White)