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ECONOMY > Finance

Japan keeps primary budget outlook unchanged

  • July 29, 2022
  • , Jiji Press , 10:56 p.m.
  • English Press

Tokyo, July 29 (Jiji Press)–Japan’s Cabinet Office on Friday maintained its forecast that the country will achieve a primary budget surplus in fiscal 2026.

 

The estimate is based on the scenario that the country will continue to post high nominal economic growth of some 3 pct. The forecast was kept unchanged from the previous projection in January.

 

A primary budget surplus means that spending other than debt-servicing costs is covered without relying on new debt issuance.

 

The latest estimate put the country’s primary budget deficit for fiscal 2025 at 500 billion yen, down 1.2 trillion yen from the previous projection, reflecting higher-than-expected tax revenue due to a recovery in corporate earnings.

 

It also said that the balance will end in a surplus of 2.8 trillion yen in fiscal 2025 if the country continues to reduce spending at the current pace.

 

The Cabinet Office lowered the estimated nominal growth rate under a baseline scenario of low growth from around 1 pct to around 0.5 pct.

 

As a result, the projected primary budget deficit under the baseline scenario in fiscal 2031 rose from 4.6 trillion yen to 5.6 trillion yen.

 

The latest projections do not take into account a possible increase in defense spending, a major point of contention in drawing up the government’s budget for fiscal 2023, which starts in April next year.

 

Some in the ruling Liberal Democratic Party are demanding a massive supplementary budget to deal with inflation, making it unclear whether Japan’s finances will improve according to plan.

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