The Prime Minister’s Office in Tokyo
13:41 JST, July 30, 2024
Tokyo, July 29 (Jiji Press) — The Japanese government said Monday it expects to achieve a primary budget surplus of about ¥800 billion for central and local governments in the 2025 fiscal year that begins in April next year.
Tax revenues are expected to rise on robust corporate profits, while spending growth is likely to slow after years of massive stimulus spending, the central government said in an estimate presented at a meeting of Prime Minister Fumio Kishida’s Economic and Fiscal Policy Council.
“We will continue our efforts to reduce expenditures 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 revenues and other resources without incurring debt.
If the government achieves a primary budget surplus, it will be the first time since then-Prime Minister Junichiro Koizumi set such a target 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 raft of stimulus spending, and the target has been repeatedly postponed.
The government’s estimate presents two scenarios for Japan’s economic growth. One is that the economy will continue to grow steadily at a rate of more than 1%, and the other is that the growth rate will remain around 0.5% in the medium to long term.
In both cases, the primary surplus is expected to last until at least fiscal year 2033, if no additional economic support measures are implemented, the government said.
The government aims to gradually reduce the ratio of outstanding debt to the country’s gross domestic product.
If the economic growth rate remains above 1%, the ratio will decline from 211.0% in FY 2022 to 168.9% in FY 2033. The ratio is expected to decline gradually to 196.0% in FY 2028, before picking up again if the growth rate remains around 0.5%, the government said.
