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Japan considers new target to reduce fiscal deficit to 3% of GDP

The Japan Times

The government is considering setting a new target to reduce its fiscal deficit to 3 percent of nominal gross domestic product by fiscal 2021, informed sources have said. The government hopes to include the target in its new guidelines for economic and fiscal policy management due out as early as June, as it believes that its interest payments on existing bonds may soar, the sources said Friday. The European Union has a similar target for its members. In Japan, such a target has been proposed at the government's Council on Economic and Fiscal Policy, which drafts the policy guidelines. Japan's fiscal deficit is forecast to stand at 4.4 percent of nominal GDP in fiscal 2018, according to medium- to long-term economic and fiscal estimates submitted by the Cabinet Office in January.

Finance Minister Taro Aso pledges to restore Japan's fiscal health even as government spends more on child care

The Japan Times

Despite increased spending on child care support and education, the Abe administration will never waver in its efforts to fix government finances and achieve a primary budget surplus, Finance Minister Taro Aso said Monday.

Japan's government to review growth assumptions used for fiscal projections

The Japan Times

The government plans to consider reviewing its economic growth assumptions used as a basis for projecting medium to long-term economic and fiscal performances for the entire country and local communities, according to sources.

Growth prioritized over fiscal health in government's draft economic plan

The Japan Times

The Japanese government said Tuesday it is preparing fresh fiscal stimulus to ensure that an upcoming tax hike does not stall the economy, a move that has sparked concerns that the country is putting off improving its tattered finances. According to a draft policy plan submitted by an advisory panel to Prime Minister Shinzo Abe, "extraordinary measures" will be included in the budget for fiscal 2019 and 2020 to offset the effect on domestic demand of an increase in the national 8 percent consumption tax to 10 percent in October 2019. The measures could include tax breaks on big ticket purchases such as housing and automobiles, as well as daily necessities such as groceries and newspapers. Education subsidies for children up to five years old will be implemented at the same time as the tax hike, as opposed to the previous schedule where they were spread over a two-year period. "We will take action in a flexible manner to keep economic swings (caused by the tax hike) to a minimum," Abe told a meeting of the Council on Economic and Fiscal Policy at his office.


The Japan Times

The government is likely to project a deteriorating primary balance deficit in fiscal 2018 after delaying the second stage of a consumption tax hike, government sources said Friday. Cabinet Office projections due to be released next week show the ratio of the primary balance deficit -- which excludes debt servicing and revenue from new debt -- to nominal gross domestic product will be around 1.9 percent in fiscal 2018, higher than the 1.7 percent estimated in January. For fiscal 2020, the government is likely to project a primary deficit of around 5.6 trillion, smaller than the 6.5 trillion forecast in January, thanks to higher tax revenues on economic growth and spending cuts, the sources said. The January estimates were based on an "economic revival scenario," under which Japan will achieve economic growth of more than 3 percent in nominal terms from fiscal 2018.