Japan to set aside $36 billion for education, growth steps in FY2018 budget

TOKYO (Reuters) - Japan will set aside roughly 4 trillion yen ($35.6 billion) in the next fiscal year's state budget for measures that focus on education as part of Prime Minister Shinzo Abe's strategy to spur growth, government sources told Reuters on Tuesday.

While setting aside money to develop Japan's growth strategy, the government will curb spending in other areas such as public works by 10 percent from this fiscal year, the sources said on condition of anonymity as the plan has not been finalised.

The 4 trillion yen pool will be spent on steps that include the nurturing of talented people, making education free of charge and boosting service-sector productivity, by allocating funds saved by cutting spending elsewhere, the sources said.

The plan will be part of an outline on the budget for the next fiscal year that begins in April 2018.

Based on the outline, to be approved by Abe's cabinet later this week, the Ministry of Finance will gather spending requests from government ministries by the end of August.

The government will not set a ceiling for total expenditure, the sources added, indicating the premier's stance of attaching greater importance to growth than fiscal consolidation.

However, it will aim to cap annual gains in social security spending, which is snowballing due to Japan's fast-ageing population, at 630 billion yen through streamlining efforts, they said.

($1 = 112.2500 yen)

(Reporting by Takaya Yamaguchi; Writing by Tetsushi Kajimoto; Editing by Jacqueline Wong)