The new key fiscal target will probably become halving the ratio of the primary balance deficit to gross domestic product by the end of fiscal 2013, according to a draft of the government’s upcoming fiscal guideline.
The draft, a copy of which was obtained Thursday by Kyodo News, states that the government will then aim to realize the surplus ratio by around the end of 2019.
Concerning the ratio of outstanding public debt to GDP, the draft says the government will try to stop the ratio from expanding by around 2015 and reduce it in a stable manner thereafter.
Japan’s long-term public debt, already the largest of any industrialized nation, is projected to reach 168 percent of GDP at the end of next March, the Finance Ministry said.
In an attempt to restore the nation’s deteriorating fiscal health, the draft also says it is important to reform the tax system, including suggesting the need to raise the consumption tax in fiscal 2011, should the economy recover.
The envisioned consumption tax hike will cover rising social welfare expenses resulting from the declining birthrate and aging population.
The government is set to focus on improving child-care services and early childhood education by around fiscal 2011. It may be that early childhood education will be free of charge around that time.
With regard to spending reforms, the draft says the most important will be reducing the number of central government officials.
The outline says the number should be cut by more than 10 percent over the five years after fiscal 2010, by such means as transferring some officials to local governments. It also says the levels of their pay must be more sensitive to average salaries in the private sector and should not be considerably higher.
The government’s key economic panel, chaired by Prime Minister Taro Aso, is scheduled to finalize the guideline on June 23.
How to create a new goal for restoring fiscal soundness was a major topic at a meeting Wednesday of the Council on Economic and Fiscal Policy.
At the meeting, Aso ordered members of the council to work hard until later this month to come up with new fiscal goals and include them in the so-called 2009 basic policies for economic and fiscal management.
The basic policies will serve as the government’s guideline for the fiscal 2010 budget.
Government discussions regarding new fiscal targets have accelerated following the decision to implement a series of massive stimulus measures in the wake of the global economic crisis.
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