The Abe administration plans to set a medium-term target to achieve its key fiscal reform goal in fiscal 2020, aiming to reduce the ratio of the primary deficit to gross domestic product to around 1 percent in fiscal 2018, sources said Monday.
The medium-term goal, an improvement from a projected primary balance deficit equivalent to 3.3 percent of nominal GDP in the current fiscal year, is aimed at meeting Japan's international commitment to turn the primary balance into a surplus by fiscal 2020.
The government will examine progress in fiscal 2018 regarding meeting the medium-term target and devise additional revenue and expenditure measures if attaining the goal appears unlikely, the sources said.
The plan will be proposed by private-sector members at a meeting Tuesday of the Council on Economic and Fiscal Policy, as the government's key economic panel starts full-fledged discussions to finalize a new fiscal rehabilitation plan this summer.
It will also be incorporated in the government's medium- to long-term economic and fiscal policy blueprints scheduled to be compiled as early as June.
A deficit in the primary balance means the nation cannot finance government spending other than debt-servicing costs without issuing new bonds.
Under its fiscal rehabilitation plan to turn the primary balance into a surplus, the government plans not to further increase the consumption tax rate after raising the rate by 2 percentage points to 10 percent as scheduled in April 2017.
Instead, the government is seeking to rely on solid economic growth to attain the goal.
On Tuesday, the private-sector members are likely to hammer out a plan to restrain the public burden including social security costs as much as possible, while steadily implementing the government's plan to raise the consumption tax rate to 10 percent.