An official prediction released Friday points to harder fiscal challenges ahead, with the combined primary budget balance deficit of the central and local governments predicted to grow to ¥23.2 trillion in fiscal 2020, ¥1.5 trillion more than was estimated in June.
Prime Minister Naoto Kan's administration is aiming to achieve a primary balance surplus by the end of fiscal 2020. If the government is to meet that goal by raising the consumption tax, the unpopular levy would have to be raised to more than 14 percent from the current 5 percent.
The primary budget balance is a key indicator of fiscal conditions and refers to the gap between revenue excluding government bond sales and spending excluding debt-servicing costs for the year.