Later he will present plans to grant tax relief and reduce expenditures required by the state, she said.

His short-term measures to reduce expenditure brought the figure down to £1,420 million.

"Revenue is down significantly so I believe action should be taken immediately to reduce expenditures," he said.

This has the effect of reducing both public expenditure and the budget deficit below what they would otherwise have been.

The research needed to develop new sources is also expensive, and oil companies, together with many American industries, are reducing such expenditures.

So where pressure exists to reduce expenditure the reduction is most likely to be achieved.

Other minor reforms have been suggested for reducing public expenditure.

"They've got to reduce expenditures, including some sensitive ones, like fuel subsidies."

For example, it was believed that reducing public expenditure in social areas would reduce deficits.

The buyer's initial real interest rate, then, is 6 percent, and he has to draw from savings, or reduce other expenditures, to cover the cost.