By Yoshifumi Takemoto
TOKYO (Reuters) – Japan is unlikely to meet its target of running a primary budget surplus by next fiscal year, according to three sources with knowledge of fresh fiscal estimates, as the minority government faces mounting pressure for more spending.
The new estimate, to be released this week, overturns the government’s forecast from last July that it would achieve a primary budget surplus by the fiscal year that starts in April. It would be the first surplus since the target was introduced in the early 2000s.
The sources declined to be identified because the matter is still private.
With a debt more than twice the size of its economy, Japan faces an urgent task of repairing its dilapidated public finances, particularly as the Bank of Japan eases its decade-long, ultra-loose monetary policy that has kept borrowing costs close to zero.
However, the ruling coalition’s loss of its parliamentary majority increased pressure on Prime Minister Shigeru Ishiba’s government to expand the budget to appease voters and the opposition, prompting it to draw up a supplementary spending budget of 13.9 trillion yen ($88.06 billion). at the end of last year.
The primary budget balance, which excludes new bond sales and debt servicing costs, is a key measure of how much policy measures can be financed without issuing debt. The target dates for the surplus have been moved several times.
($1 = ¥157.8500)
