Japan to keep FY2025 target for balancing budget in review: Report

10 months ago 84

Japan will stick to its fiscal 2025 target for balancing its budget when it reviews the timeframe for the goal in coming weeks, the Mainichi Shimbun reported on Thursday, in an early victory for proponents of bringing the country's fiscal house in order.

Whether the government would keep or ditch the goal in favour of more stimulus spending has been in focus as Prime Minister Fumio Kishida faced pressure from both sides within his ruling Liberal Democratic Party (LDP).

As part of efforts to rein in its huge public debt, Japan has for years set a timeframe for bringing the primary budget, excluding new bond sales and debt servicing costs, back to a surplus in its annual fiscal blueprint. The government has pushed back the goal of achieving a primary balance several times. Its most recent pledge that it would do so in fiscal 2025 came with a caveat that the target would be reassessed given the economic pain caused by the COVID-19 pandemic.

The Nikkei business daily reported separately that the government would bring forward by one year a medium-term forecast of achieving a surplus, to fiscal 2026, in anticipation of higher corporate tax revenues through an economic recovery.

There is uncertainty, however, whether Japan can speed up efforts to keep its fiscal house in order as Kishida faces pressure to maintain or ramp up spending ahead of an upper house election later this year.

A vast majority of Japanese firms want fiscal support to keep flowing at least through this year, a Reuters poll showed, even as major economies from Europe to the United States dial back crisis-mode economic stimulus programmes.

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