The government aims to restore fiscal health by achieving a surplus in the primary balance in fiscal 2020, according to the outline of a bill on fiscal consolidation.
The government will also set a goal of starting to reduce the ratio of outstanding public debt to gross domestic product during the 2020s and begin making arrangements based on these numerical targets, sources said.
The government is mulling submitting the bill on economic growth, social security and fiscal discipline restoration during the current Diet session.
Amid ballooning social security costs, at least ¥10 trillion to ¥20 trillion will be needed per year to achieve the targets even if tax revenues increase as a result of a recovery.
It appears inevitable that the government would have to start talking about tax hikes, including an increase in the consumption tax, to achieve the targets, which means the bill is unlikely to be compiled ahead of this summer’s Upper House election.
A primary balance surplus means that expenditures, excluding debt-servicing costs, are covered by revenues without issuing new debt.
According to estimates by the Cabinet Office, the deficit in the primary balance is expected to total ¥33.5 trillion at the end of this fiscal year next March, comprising 7.1 percent of GDP.
The government aims to halve the ratio in fiscal 2015 and eventually eliminate the deficit in fiscal 2020, according to the draft outline compiled by the National Policy Unit.
In terms of fiscal revenue and expenditure which includes debt-servicing costs, the Cabinet Office estimates that the nation’s deficit is likely to total ¥44.8 trillion in fiscal 2010.
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