On the back of growth in tax revenue amid improvement in corporate profits, the deficit in Japan’s primary balance is expected to shrink to around ¥14 trillion in fiscal 2015 starting April 1, according to Finance Ministry sources.
A fall in the deficit suggests that Prime Minister Shinzo Abe’s Cabinet is likely to achieve its key fiscal rehabilitation goal of halving the ratio of the primary balance deficit to gross domestic product by fiscal 2015 from the fiscal 2010 level.
To attain that target the government said, in a medium-term fiscal reform plan crafted in 2013, it should slash the primary balance deficit to about ¥15 trillion in fiscal 2015.
A deficit in the balance means the country cannot finance government spending other than debt-servicing costs without issuing new bonds. An improvement in the balance is viewed as a critical first step toward fiscal consolidation.
But it will be difficult for Abe to restore the nation’s precarious public finances, given that social security costs, which account for 40 percent of Japan’s policy spending, have increased by ¥1 trillion annually due to a rapidly graying population.
In the next fiscal year, central government tax revenue is estimated to total nearly ¥54 trillion, the highest level in 22 years, the sources said.
via Japan Times