Japan on Friday pushed back its estimated return to a budget surplus by two years, due to the massive increase in spending needed to support the economy during the coronavirus and putting pressure on the nation’s massive debt burden.
The country faces the challenge of restoring fiscal health as even as some policymakers call for more spending to deal with the pandemic.
The government has delayed its forecasts for achieving a surplus to the fiscal year starting April 2029 from the previous projection of fiscal 2027 made in January.
In its twice-yearly fiscal and economic projections, the government expected the primary budget, excluding new bond sales and debt servicing, to swing to a surplus of only 300 billion yen ($2.87 billion) in the fiscal year 2029.
The government has so far compiled a combined stimulus spending worth $2.2 trillion to soften the hit from the coronavirus outbreak.
Japan’s worsening fiscal health highlights the difficulties for policymakers as they try to boost the economy from a sharp slump due to the pandemic, while fighting to curb the spread of the virus.
