Tokyo, April 20 (Jiji Press)–The Japanese government plans to keep its target of turning around the primary budget balance at the state and local governments in fiscal 2025 intact in its new economic and fiscal policy guidelines to be compiled in June, Jiji Press learned Tuesday.
By sticking to the target, the government will reiterate its resolve to continue spending and revenue reforms to maintain its fiscal credibility although the goal is very difficult to achieve due to growing spending and falling tax revenue amid the novel coronavirus epidemic.
The government will launch full-fledged talks on the matter at a meeting on Monday of the Council on Economic and Fiscal Policy, which is chaired by Prime Minister Yoshihide Suga, informed sources said.
A primary budget surplus means that the central and local government can finance their spending on policy measures, except for debt-serving costs, without issuing new debt securities.
The government decided in June 2018 to achieve a primary budget surplus in fiscal 2025.
It also set an interim goal of lowering the proportion of the primary budget deficit to the country’s nominal gross domestic product to about 1.5 pct in fiscal 2021 by promoting reductions of social security costs and other expenses.
But the proportion is seen coming to 7.2 pct in the fiscal year that started this month, due to massive spending on measures related to the fight against the novel coronavirus.
Meanwhile, the Cabinet Office estimates that Japan may be able to post a primary budget surplus in fiscal 2026 if it continues spending reforms and the country’s economy grows at a pace of over 3 pct in nominal terms.
Under the estimate, the country would likely run a primary budget deficit of about 2 trillion yen in fiscal 2025, according to the government agency.
But a senior official of the Cabinet Office said, “It would not be impossible to eliminate the deficit if we steadily boost the country’s economic growth and increase tax revenue.”