Even if the government meets its goal of reducing the deficit to 3 percent or less of the gross domestic product by 2003, there will still be a revenue shortfall of 24.9 trillion yen, Finance Ministry calculations showed Oct. 1.In making its calculations, the ministry put annual economic growth in real terms during the next six years at 1.75 percent, and systematically reduced deficit-covering bond issues by 1.25 trillion yen every year so that no such bonds would be issued by 2003, as the government intends.General expenditures — the policy-related portion of the budget — were kept flat at the fiscal 1998 level of 44.8 trillion yen, but outlays exceeded revenue in the projections due to obligatory spending such as debt-servicing costs and tax grants to local governments, ministry officials said. The figures were presented to the planning committee of the prime minister’s Conference on Fiscal Structural Reform. They highlight the critical state of the nation’s coffers.As of fiscal 1997, the deficit of the national and local governments combined comes to roughly 5.4 percent of GDP. The planning committee also discussed devising a plan to eliminate the roughly 28 trillion yen in debts left behind after the privatization of Japan National Railways in 1987.Many panel members gave a cool response to the Transport Ministry’s recent proposal to transfer the debts, currently held by JNR Settlement Corp., to a special account that would receive a portion of the debt-servicing outlays from the general account budget. This would only increase the burden on the general account and might lead to an issuing of government bonds in the future, further damaging the nation’s fiscal health, some members said.
Deficit proves a tough nut to crack