Japan shrinks budget surplus forecast as it grapples with debt mountain
Japan Times -- Jan 18
Japan kept unchanged its timing for balancing the primary budget on Friday, but expects to see a much smaller excess than previously thought when it hits a budget surplus, underlining the government’s struggle to rein in massive public debt.

Prime Minister Shinzo Abe’s government stuck to its forecast of achieving a budget surplus by fiscal 2027, but expects it to be slimmer due to a downward revision to its outlook for economic growth and tax revenues since previous projections made in July.

In its twice-yearly fiscal and economic projections, the government now expects the primary budget, excluding new bond sales and debt servicing, to swing to a surplus of just ¥300 billion ($2.73 billion) in the fiscal year starting April 2027. The previous projection was a surplus of ¥1.6 trillion.

The latest calculations underscore the challenge faced by the world’s third-largest economy in fixing its tattered finances as the costs of caring for its rapidly graying population continue to grow.

Japan has the industrial world’s heaviest debt burden, more than twice the size of its ¥551 trillion economy, and policymakers have wrestled to keep it in check as they spend more on social security and public works.

Abe has placed greater importance on growth, to preserve a fragile economic recovery, than on fiscal reform.

News source: Japan Times
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