AVN 57.02 Increased By ▲ 5.38 (10.42%)
BOP 10.13 Increased By ▲ 0.36 (3.68%)
CHCC 128.83 Increased By ▲ 9.89 (8.32%)
DCL 9.32 Increased By ▲ 0.52 (5.91%)
DGKC 107.59 Increased By ▲ 3.45 (3.31%)
EFERT 67.50 Increased By ▲ 0.91 (1.37%)
EPCL 32.60 Increased By ▲ 1.56 (5.03%)
FCCL 21.12 Increased By ▲ 0.29 (1.39%)
FFL 11.97 Increased By ▲ 0.33 (2.84%)
HASCOL 13.58 Decreased By ▼ -0.03 (-0.22%)
HBL 124.66 Increased By ▲ 2.88 (2.36%)
HUBC 81.40 Increased By ▲ 0.99 (1.23%)
HUMNL 9.60 Increased By ▲ 0.18 (1.91%)
JSCL 15.85 Increased By ▲ 0.45 (2.92%)
KAPCO 24.75 Increased By ▲ 0.26 (1.06%)
KEL 3.71 Increased By ▲ 0.22 (6.3%)
LOTCHEM 13.20 Increased By ▲ 0.34 (2.64%)
MLCF 33.65 Increased By ▲ 1.40 (4.34%)
OGDC 114.50 Decreased By ▼ -0.29 (-0.25%)
PAEL 32.74 Increased By ▲ 0.74 (2.31%)
PIBTL 11.34 Increased By ▲ 0.40 (3.66%)
PIOC 76.10 Increased By ▲ 2.86 (3.91%)
POWER 8.12 Increased By ▲ 0.94 (13.08%)
PPL 99.03 Decreased By ▼ -1.06 (-1.06%)
PSO 184.00 Increased By ▲ 4.65 (2.59%)
SNGP 56.36 Increased By ▲ 0.95 (1.71%)
STPL 11.21 Increased By ▲ 0.09 (0.81%)
TRG 49.76 Increased By ▲ 3.34 (7.2%)
UNITY 12.56 Decreased By ▼ -0.03 (-0.24%)
WTL 1.01 No Change ▼ 0.00 (0%)
BR100 4,136 Increased By ▲ 72 (1.77%)
BR30 21,159 Increased By ▲ 380 (1.83%)
KSE100 39,872 Increased By ▲ 613 (1.56%)
KSE30 17,320 Increased By ▲ 250 (1.47%)
COVID-19 TOTAL DAILY
CASES 280,029 331
DEATHS 5,984 8
Sindh 121,486 Cases
Punjab 93,197 Cases
Balochistan 11,774 Cases
Islamabad 15,076 Cases
KP 34,223 Cases
World

Japan delays budget surplus forecast to 2027 as fiscal reform struggles

TOKYO: Japan pushed back projections on Wednesday for bringing its budget into surplus, in a sign Prime Minister Shinzo

31 Jul 2019

TOKYO: Japan pushed back projections on Wednesday for bringing its budget into surplus, in a sign Prime Minister Shinzo Abe's government is struggling to rein in massive public debt as the economy comes under increasing pressure.

The government pushed back its forecast of achieving a surplus by one year to fiscal 2027, citing a downward revision to its outlook for GDP growth, inflation and tax revenue since its previous projections 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 0.2 percent of gross domestic product (GDP) in fiscal 2027.

In its January estimate, the government expected the primary budget balance to swing to a 0.1 percent surplus of gross domestic product in fiscal 2026.

Japan's debt burden is the industrial world's heaviest, at more than twice the size of its $5 trillion economy. Abe has put  greater importance on growth to safeguard the fragile economy than fiscal reform.

Solid domestic demand has helped offset weaker exports so far this year, but a planned sales tax hike in October to 10% from 8% could curb consumer spending.

Abe voiced his readiness to boost fiscal spending if the tax increase hurts consumption.

"As we aim to achieve our fiscal reform target, we'll do the utmost to steer economic and fiscal policy appropriately and flexibly," Abe told government's top economic council.

"We will respond as appropriate while watching to see any  swings in demand after the tax hike, and the most up-to-date economic situation."

Weak external demand forced the government to lower economic growth forecasts from the January estimate. It now expects real and nominal GDP growth at 2% and above 3%, respectively, from fiscal 2023, which many private-sector economists see as rosy.

The government on Monday cut its fiscal 2019 real GDP growth forecast to 0.9% from 1.3%.

In Wednesday's report, inflation was not forecast to reach 2% until 2024, a further setback for the government's and the central bank's aim of meeting the inflation target.

Based on government's more conservative 'baseline scenario', in which real GDP growth is estimated to hover around 1% in the coming years, the primary budget was seen in the red through the forecast period to fiscal 2028.

A primary budget surplus was originally targeted for 2020, but it has repeatedly been pushed back due to a bulging cost of welfare to support the ageing population and fiscal stimulus to pull Japan out of two decades of deflation and stagnation.

The government has now pledged to balance a primary budget by the fiscal year end to March 2026.

This fiscal year's budget spending reached a record 101.5 trillion yen ($935.05 billion) including 2 trillion yen in steps to ease a pain from a planned sales tax.

Next fiscal year's budget is also expected to exceed 100 trillion yen for a second straight year, highlighting the difficulty in curbing fiscal spending. It features 4.4 trillion yen in spending for measures to promote Abe's growth strategy.

Copyright Reuters, 2019