By Yoshifumi Takemoto
TOKYO (Reuters) – Japan is likely to miss achieving its goal of running a primary budget surplus by the next fiscal year, according to three sources with knowledge of fresh fiscal estimates, as the minority government faces increasing pressure for more spending.
The new estimate, to be released this week, knocks the government’s forecast made in July last year for delivering a primary budget surplus by the fiscal year starting in April. It would have marked the first surplus since the goal was introduced in early 2000s.
The sources declined to be identified as the matter is still private.
With debt at more than twice the size of its economy, Japan faces an urgent task of fixing its tattered public finances, especially as the Bank of Japan is dialling back its decade-long, ultra-loose monetary policy that has kept borrowing costs near zero.
However, the ruling coalition’s loss of a parliamentary majority has raised pressure on Prime Minister Shigeru Ishiba’s government to expand the budget to appease voters and the opposition, prompting it to compile an extra budget with 13.9 trillion yen ($88.06 billion) spending late last year.
The primary budget balance, which excludes new bond sales and debt-servicing costs, is a key gauge of how much policy measures can be financed without issuing debt. The target dates for a surplus have been pushed back several times.
($1 = 157.8500 yen)