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Yomiuri Shimbun file photo The Prime Minister’s Office in Tokyo
Jiji Press
13:41 JST, July 30, 2024
Tokyo, July 29 (Jiji Press) — The Japanese government said Monday that it expects to achieve about ¥800 billion in primary budget surplus for the central and local governments in fiscal 2025, which starts next April.
Tax revenue is expected to increase thanks to robust corporate earnings while expenditure growth is likely to slow after years of massive stimulus spending, the central government said in an estimate put forward at a meeting of Prime Minister Fumio Kishida’s Council on Economic and Fiscal Policy.
“We will continue our efforts to reduce spending and promote reforms,” Kishida said.
The primary balance is an indicator of how much government spending on policies such as social security and public works can be covered by tax revenue and other means without relying on debt.
If the government achieves a primary budget surplus, it will be the first time since it set a goal of this under then Prime Minister Junichiro Koizumi in the early 2000s.
Since the collapse of the country’s asset-driven bubble economy in the early 1990s, the primary balance has been in the red due to falling tax revenues and a series of stimulus spending. The goal has been repeatedly pushed back.
The government estimate presents two scenarios for Japan’s economic growth.. One is that the economy will continue to grow at a rate exceeding 1 % stably and the other is that the growth rate will remain around 0.5 % in the medium to long term.
In both cases, a primary surplus is expected to continue until at least fiscal 2033, if no additional economic support measures are implemented, the government said.
The government aims to steadily lower the ratio of outstanding debts to the country’s gross domestic product.
If the economic growth rate continues to exceed 1 %, the ratio will fall to 168.9 % in fiscal 2033 from 211.0 % in fiscal 2022. The ratio is forecast to gradually drop to 196.0 % in fiscal 2028 before bouncing back if the growth rate remains around 0.5 %, the government said.
