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By Yoshifumi Takemoto and Tetsushi Kajimoto
TOKYO (Reuters) -Japan's government will set aside $26 billion for new child care measures, slightly more than earlier estimated, in a move likely to add more debt to the industrial world's heaviest public debt burden.
Prime Minister Fumio Kishida has vowed to double such spending over the next three years to arrest the country's dwindling birth rate, even if that means further aggravating the government's fiscal position.
Kishida told ministers on Wednesday he wanted to increase the planned child care spending, which is on top of the agenda for his administration's mid-year economic policy guidelines to be adopted in mid-June.
The measures are aimed at supporting higher education, preventing child abuse in poverty, and ensuring medical care for handicapped children, Economy Minister Shigeyuki Goto cited Kishida as telling the ministers' meeting.
There was no discussion on sources of funding, he added.
Japan is already the industrial world's most indebted government with public debt that is more than double the size of its economy.
The government is leaning towards introducing a new type of bonds to raise funds for education fees, Kyodo news agency reported.
"The talk of this budget comes at delicate time when the government tries to bring in the primary budget surplus while government debt balloons,' said Koya Miyamae, senior economist at SMBC Nikko Securities.
"It could complicate matters when it comes for the Bank of Japan to alter monetary easing at the risk of shooting up borrowing costs."
The spectre of doubling child care as well as military spending aimed at coping with threats from China and North Korea runs counter to any move towards fiscal reform.
Kishida has ruled out sales tax hikes as an option, while his government is looking to tap increased premiums for public medical and slash other social welfare outlays to fund more childcare spending.
Births in Japan plunged to a record low in 2022, official estimates show, dropping below 800,000 for the first time - a watershed moment that came eight years earlier than the government had expected. ($1 = 135.0500 yen)
(Reporting by Yoshifumi Takemoto and Tetsushi Kajimoto; Editing by Himani Sarkar and Kim Coghill)