Japan Govt to Scrap Single-Year Primary Surplus Goal

Tokyo, Dec. 25 (Jiji Press)–The Japanese government plans to scrap its target of turning the primary budget balance at the central and local governments into a surplus in a specific fiscal year. At a meeting Thursday of the Council on Economic and Fiscal Policy, headed by Prime Minister Sanae Takaichi, members from the private sector supported the envisaged abolition of the current method and instead called on the government to check the primary balance over several fiscal years. At the meeting, council members discussed issues related to the compilation of next year’s basic guidelines on economic and fiscal policy management. The primary budget balance is an indicator for a nation’s fiscal health. A primary surplus means a situation in which expenditures on policy measures, such as social security and public works projects, are covered with tax and other revenues without relying on revenue from debt issuance. The private-sector members urged the government to stably lower the ratio of outstanding debt to gross domestic product as a goal of fiscal policy management. On the assumption that the ratio will go down, they indicated that fiscal resources should be allocated intensively in a timely way to areas that help strengthen the country’s future economic growth and national security under the Takaichi administration’s slogan of “responsible and proactive” public finances. Meanwhile, Japanese long-term interest rates could spike if the country’s fiscal condition deteriorates further. In this regard, the private-sector members warned that irresponsibly increasing expenditures involves the risk of losing financial markets’ confidence in the country’s public finances, calling for the establishment of a framework for medium- and long-term investments and rules on expenditures under initial and supplementary government budgets. They also called on the government to designate the introduction of a refundable tax credit system as a national project at a time when working generations’ burdens of social security premium payments are increasing. END [Copyright The Jiji Press, Ltd.]