TOKYO, Sept.21 (Reuters) – Japan may need more time to meet its budget target of achieving a surplus in its primary balance by fiscal year 2025, Finance Minister Taro Aso said on Tuesday. by refraining from abandoning this elusive goal.
Some candidates in the ruling Liberal Democratic Party (LDP) leadership race have been cautious about the primary balance goal given uncertainty over the impact of COVID-19 on the economy.
A race winner is effectively guaranteed to become a new prime minister given the ruling bloc’s majority in the powerful lower house of parliament.
“It is true that we are facing a situation where it may take longer to reach the primary balance target,” Aso told reporters after a cabinet meeting. He declined to comment on the comments of the contenders for the LDP race.
On the other hand, Japan’s tax revenues have increased despite the pandemic’s impact on a fragile economy, making it difficult to forecast the fiscal outlook, Aso said.
He said he had no idea of the additional budget spending the coronavirus might require.
“It is important to find the right balance between income and expenditure,” he said.
The primary budget balance, which excludes new bond sales and debt servicing, serves as a barometer to determine whether Japan can finance its spending with tax revenues without resorting to new borrowing.
Japan has pushed back the primary balance target several times in the past due to a series of strong fiscal stimulus it has put in place to deal with economic downturns.
Many private sector analysts find the 2025 tax target difficult, if not impossible, to achieve.
The government’s own projections suggested in July that the expected timeframe for achieving a primary balance surplus would be 2027 – two years earlier than previous estimates due to a surprise increase in tax revenue.
Reporting by Tetsushi Kajimoto; Editing by Ritsuko Ando and Stephen Coates
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