Japan Govt Urged to Put Weight on Primary Budget Balance

Tokyo, Dec. 3 (Jiji Press)–A key Japanese Ministry of Finance panel has urged the government to attach importance to the primary budget balance, in the run-up to the compilation of the state budget for fiscal 2026, which starts next April. While the administration of Prime Minister Sanae Takaichi, which was launched in October, advocates aggressive fiscal spending to create a strong economy, the Fiscal System Council called on the government to conduct fiscal management by thoroughly examining the primary balance, an indicator of fiscal soundness, every fiscal year. Submitting a set of proposals to Minister of Finance Satsuki Katayama on Tuesday, the council also called for utmost care to ensure that the government obtains confidence in its fiscal management from financial markets. A primary surplus refers to a situation in which spending on policy measures is covered without new debt issuance. The administration of former Prime Minister Shigeru Ishiba, the immediate predecessor of Takaichi, had set a goal of turning around the balance to surplus as soon as possible in fiscal 2025-2026. Meanwhile, Takaichi has vowed to review the policy of aiming to post a primary budget surplus on a single-fiscal-year basis and instead shift to assessing the budget balance over several years. She aims to obtain trust in Japan’s public finances by boosting economic growth and tax revenue through active fiscal spending and lowering the proportion of public debts to the country’s gross domestic product. Based on the expansionary policy, a draft of the government’s fiscal 2025 supplementary budget drawn up last month features 18.3 trillion yen in general-account spending, the largest for an extra budget since the end of the COVID-19 pandemic. The Fiscal System Council called on the government to bring its spending structure, including supplementary budgets, back to normal in order to secure fiscal space that can be used in emergencies. “It is necessary to turn around the primary balance to surplus to stably lower the debt-to-GDP ratio,” Hiroya Masuda, acting chair of a subgroup of the council, said at a press conference. Stressing the importance of sustainably increasing disposable income at households in order to realize a virtuous economic cycle, the council called for minimizing working generations’ burdens of social security premiums. END [Copyright The Jiji Press, Ltd.]