EXCLUSIVE: Japan Sees 800-B.-Yen Primary Surplus for FY '25

Tokyo, July 25 (Jiji Press)--The Japanese government will expect a primary budget surplus of about 800 billion yen for fiscal 2025 thanks to tax revenue growth driven by robust corporate earnings, Jiji Press learned Thursday.
 

The estimate on the primary balance for the central and local governments will be presented to the government's Council on Economic and Fiscal Policy soon. A primary surplus occurs when spending other than debt-servicing costs is covered without relying on new debt issuance.
 

In its annual economic and fiscal management guidelines for fiscal 2024, adopted last month, the government said that it aims to achieve such a surplus by fiscal 2025. The achievement would mark key progress toward fiscal consolidation.
 

Meanwhile, the prospect of attaining the surplus is likely to increase pressure to expand government spending from members of the ruling Liberal Democratic Party seeking fiscal stimulus.
 

The surplus estimate does not take into account the possible compilation of a supplementary budget. If such a budget materializes, it would be uncertain whether the surplus would be realized.
 

The estimate is part of the government's medium- to long-term economic and fiscal projections, released by the Cabinet Office in January and July every year.
 

The latest projections in January this year forecast a primary deficit of 1.1 trillion yen for fiscal 2025.
 

However, the government's general-account financial results released earlier this month showed that its tax revenues hit a record high of 72,076.1 billion yen in fiscal 2023. Given the strong revenues and its expenditure reforms, the government has come to believe it can achieve a primary surplus in fiscal 2025.
 

But the projected surplus is modest for a country whose public debt amounts to about 250 pct of its gross domestic product, the worst level among developed nations.
 

In order to improve its fiscal health, the government needs to normalize its spending inflated through the COVID-19 pandemic. It is to be seen whether this can be achieved as Prime Minister Fumio Kishida's administration is seen formulating economic measures in autumn.
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