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Japan projected to see primary budget surplus in FY 2018+(Japan Economic Newswire Via Acquire Media NewsEdge) TOKYO, Jan. 14_(Kyodo) _ Japan is expected to achieve a primary budget surplus as a key milestone on the track of fiscal rehabilitation in fiscal 2018, seven years behind original schedule, as tax revenues decline sharply on the economic downturn, the Cabinet Office said Wednesday. The office estimated that even with a gradual consumption tax hike from fiscal 2011, a tax revenue slump will prevent the government from attaining a primary budget surplus at an early date. A primary budget surplus will be realized when outlays other than debt-services are covered by revenues excluding debt issues. Earlier, the government had effectively ditched its target of achieving a primary budget surplus in fiscal 2011, saying it would be "very difficult." The latest estimates confirm that the target would be unrealistic. The target for Japan's fiscal reconstruction efforts was introduced in fiscal 2006 by then Prime Minister Junichiro Koizumi. The estimates, presented to the ruling Liberal Democratic Party on Wednesday, put a primary budget deficit of some 15.2 trillion yen for fiscal 2011, revised upward from about 3.9 trillion yen forecast last July. In making the estimates, the Cabinet Office has assumed that Japan's economy will grow about 1.5 percent a year in real terms on average from fiscal 2011. The office has also assumed that the sales tax will be raised from fiscal 2011 by 1 percentage point from the current 5 percent to reach 10 percent in fiscal 2015. The estimates showed that Japan will log a primary budget deficit of about 4.9 trillion yen in fiscal 2015 and that the budget balance will swing into the black with a surplus of 0.8 trillion yen in fiscal 2018. The Cabinet of Prime Minister Taro Aso is expected to adopt a medium to long-term economic and fiscal outlook later this month, including the latest estimates. The government will nevertheless retain a primary budget surplus in fiscal 2011 as a nonbinding target in a bid to demonstrate that Tokyo heeds fiscal rehabilitation, government sources said. Japan's fiscal health remains the worst among major developed countries, with the balance of debts issued by the central and local governments forecast to reach 157.5 percent of the nation's annual gross domestic product at the end of March 2010. Aso has indicated his intention to prioritize fiscal expansion over fiscal rehabilitation efforts at the moment to buoy the faltering Japanese economy. Copyright ? 2009 Kyodo News International, Inc. |