Japan PM Abe vows to stick to fiscal reconstruction goal

Jumat, 01 Maret 2013 01:09

(TOKYO-Kyodo) Prime Minister Shinzo Abe said Thursday his government will make efforts to accomplish its internationally pledged goal of budget deficit reduction in fiscal 2015, despite additional massive bond sales planed for fiscal 2012.

"We'll map out a concrete path to simultaneously achieve economic revitalization and fiscal rehabilitation," Abe said at the end of a meeting of the government's key economic panel.

But the latest estimate released by the Cabinet Office at the Council on Economic and Fiscal Policy meeting showed Japan could log a deficit of 33.9 trillion yen, or 6.9 percent to nominal GDP, in fiscal 2013 starting April, worsening from 25.4 trillion yen, or 5.2 percent, calculated last August.

The government has promised to attain a goal of halving the ratio of the deficit in the primary balance to the nation's gross domestic product by fiscal 2015 from the level of fiscal 2010. A deficit in the balance means the country cannot finance government spending without issuing new bonds.

The government's estimates have suggested that the goal is almost infeasible as Japan's fiscal health, already the worst among major developed nations, has shown little sign of improving.

Another estimate by the Finance Ministry which has yet to be released shows that under a conservative scenario in which the economy would grow 1.5 percent in nominal terms in fiscal 2015, the primary balance deficit would be 3.4 percent to GDP even though the government limits growth in expenditures, according to sources familiar with the matter.

In the ministry's projection, the deficit is expected to reach 3.7 to 3.8 percent under the calculation method widely used by other Group of 20 economies, falling short of a half of 6.8 percent in fiscal 2010, according to the sources.

If the economy grows 3.0 percent and the government curbs spending in fiscal 2015, the primary balance deficit is likely to be 3.3 to 3.4 percent under the method, allowing Japan to manage to

accomplish its deficit-cut goal, the ministry said.

Japan's parliament enacted on Tuesday a 13.1 trillion yen supplementary budget, the second-biggest ever of its kind, to fund an economic stimulus package, bringing the country's budgetary spending for fiscal 2012 to about 103 trillion yen despite ballooning debt.

To cover the shortfall in revenue needed to pay for the extra budget, the government of Abe decided to sell an additional 7.8 trillion yen in bonds, which brought the total amount of debt for the fiscal year through March to 52 trillion yen, the Finance Ministry said.

Abe's administration has pledged to hammer out concrete measures to realize fiscal reconstruction in August or September.