Tokyo, Dec. 7 (BNA): Japanese Prime Minister Fumio Kishida said on Tuesday that Japan will review the time frame early next year to achieve its budget balancing target, ignoring prospects that it will abandon the target to further boost spending.
The government unveiled a record spending package of $490 billion last month to support the fragile economy, violating the global trend towards withdrawing stimulus measures in crisis mode.
But Kishida remains under pressure from influential supporters of big spending within his ruling Liberal Democratic Party, some of whom have called for abandoning a government goal of balancing the budget, Reuters reported.
In a move aimed at countering such calls, advocates of financial reform, including former Finance Minister Taro Aso, on Tuesday set up a new LDP committee to discuss steps needed to regulate Japan’s financial house.
“Taking steps to deal with the epidemic and restore Japan’s financial health are compatible,” Kishida told the committee, adding that sound fiscal policy is Japan’s “solid foundation.”
Kishida added that early next year the government will start a discussion on whether the current time frame for achieving the budget target is feasible.
As part of efforts to rein in its huge public debt, Japan has for years set a time frame for returning the primary budget, excluding new bond sales and debt servicing costs, to surplus in its annual fiscal scheme.
After the timeframe has been pushed back several times, the latest pledge is to achieve an initial surplus balance by fiscal year 2025 – with a warning that the target will be reassessed given the economic pain caused by the COVID-19 pandemic.
Kishida has repeatedly said that while the government’s near-term focus will be on increasing spending to combat the pandemic, Japan must come up with a long-term plan to fix its deteriorating financial situation.
FKN