The government is expecting a bigger than predicted primary deficit of ¥6.5 trillion ($55.6 billion) in fiscal 2020, reflecting the effects of a planned exemption of food items from a sales tax hike, Cabinet Office estimates showed Thursday.
The latest estimates show Japan needs to make more effort to reach its goal of achieving a primary surplus by fiscal 2020, even if tax revenues are expected to grow on the back of an economic recovery led by expanding corporate profits.
The deficit is projected to widen as the government has not come up with ways to make up for smaller potential tax revenues after deciding to exempt food items from the planned consumption tax increase to 10 percent in April next year from the current 8 percent.