Tokyo, Jan. 21 (Jiji Press)–Japan’s Cabinet Office on Thursday maintained its estimate that the country will not achieve a primary budget surplus until fiscal 2029 even if the economy nominally grows 3 pct or more annually, far beyond the government goal of fiscal 2025.
A primary budget surplus means that a government can finance its spending on policy measures, except for debt-servicing costs, without issuing new debt.
The primary budget deficit is expected to reach 69.4 trillion yen in fiscal 2020, which ends March this year, and 40.1 trillion yen the following year due to massive coronavirus relief spending, the Cabinet Office said.
The agency predicts a gradual improvement in government finances on the back of economic recovery, but still expects a primary budget deficit of 7.3 trillion yen for fiscal 2025.
If economic growth is limited to around 1.0-1.5 pct, the country is expected to have a primary budget deficit of 10.3 trillion yen in fiscal 2030, the agency said.
The estimates for fiscal 2022 and beyond do not take into consideration the effects of spending cuts in such areas as social security. The austerity effort is projected to slash the primary budget deficit by around 1.3 trillion yen every year.
The Cabinet Office said that it will be possible to achieve a primary budget surplus by fiscal 2026 if the government continues the effort.
“There’s a need to achieve high-quality growth led by private demand and to continue improvements on both the expenditure and revenue front,” in order to achieve a surplus in fiscal 2025, a senior Cabinet Office official said.
Japan has seen annual nominal growth exceed 3 pct only once since fiscal 1995. If the coronavirus crisis is prolonged, the government may be forced to spend more, delaying the path to a primary budget surplus.