By Tetsushi Kajimoto
TOKYO (Reuters) – Japan remains committed to reaching a budget surplus in fiscal 2025, Finance Minister Taro Aso said on Tuesday, even as the heavily indebted nation has been forced to ramp up spending to offset the impact of the coronavirus outbreak.
When asked about a recent move by S&P Global Ratings to cut its outlook on Japan’s sovereign credit rating, Aso said the country could avert a ratings downgrade as long as its stimulus spending succeeds in reviving the economy.
“We have no immediate plan to review the primary budget goal,” Aso told reporters after a cabinet meeting.
The fiscal goal will be included in the government’s key mid-year policy platform, to be issued by Prime Minister Shinzo Abe’s top economic advisory council next month, which will focus more on promoting digitalisation and reopening of the economy.
Having rolled out a combined $2.2 trillion in two stimulus packages to avert a deeper recession, Abe’s government remains under heavy pressure to prioritise supporting growth over fiscal reform over the short term.
The prospects of falling tax revenue due to the health crisis and snowballing social security spending to support the fast-ageing population have already made it difficult to reach a primary budget surplus by the fiscal year end to March 2026.
Still, the budget target, which excludes new bond sales and debt-servicing costs, is widely seen as the government’s commitment to fix the industrial world’s heaviest public debt at more than twice the size of its $5 trillion economy, government sources said.
“If we give up on the target, fiscal discipline would be thrown out of the window, leading to Japan selling among investors in the future,” a government source told Reuters.
S&P Global Ratings this month cut its outlook on Japan’s sovereign debt rating to stable from positive, citing uncertainty over the country’s fiscal health as it boosts spending to combat the health crisis.
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