Japan to achieve primary budget surplus next year, govt estimate shows
2024.07.29 02:24
By Leika Kihara
TOKYO (Reuters) – Japan will achieve a goal of running a primary budget surplus next year for the first time since it was introduced in 2002, a government estimate showed on Monday, as improvements in the economy and robust corporate profits boost tax revenues.
The achievement will help Prime Minister Fumio Kishida’s administration argue that Japan is making progress in fixing the country’s tattered finances, analysts say.
Japan will achieve a primary budget surplus of 0.8 billion yen ($5.2 million) in fiscal 2025, which means tax revenues will slightly exceed expenditures, according to a revised estimate presented to a meeting of the government’s top economic council.
The revision compared with an estimate made in January that showed Japan would run a primary budget deficit of 1.1 trillion yen.
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.
Japan’s primary budget balance has been in deficit for most of the postwar era with the exception of the asset bubble period between 1986 and 1991, resulting in a huge debt-pile that is twice the size of its economy.
In annual economic and fiscal policy guidelines set in June, the government affirmed a pledge to deliver a primary budget surplus by next fiscal year.
Achieving a primary budget surplus has become particularly important as the Bank of Japan is seen raising interest rates from current near-zero levels, which would boost the cost of funding Japan’s huge public debt.
($1 = 154.0000 yen)
