Japan’s Budget Surplus Goal Likely Missed

By Yoshifumi Takemoto

TOKYO (Reuters) – Japan is likely to miss its goal of achieving a primary budget surplus by next fiscal year, according to three sources with knowledge of new fiscal estimates. The minority government is facing increasing pressure for more spending.

The fresh estimate, set to be released this week, revises the government’s forecast made in July last year, where it aimed for a primary budget surplus starting in April. This would have marked the first surplus since the goal was first introduced in the early 2000s.

The sources remained anonymous as the matter is still confidential.

With public debt exceeding twice the size of its economy, Japan needs to urgently address its public finances, especially with the Bank of Japan beginning to tighten its decade-long, ultra-loose monetary policy that has kept borrowing costs near zero.

The ruling coalition’s loss of a parliamentary majority has raised pressure on Prime Minister Shigeru Ishiba’s government to expand the budget to satisfy voters and the opposition. Consequently, the government prepared an additional budget with 13.9 trillion yen ($88.06 billion) in spending late last year.

The primary budget balance, which excludes new bond sales and debt-servicing costs, is a critical indicator of how much policy measures can be funded without incurring debt. Target dates for a surplus have been postponed multiple times.

($1 = 157.8500 yen)