JAPAN may achieve fiscal consolidation in fiscal 2027, two years earlier than previously estimated, as tax revenue has been rising despite the coronavirus pandemic, the government said Wednesday.
Japan’s primary balance -- tax revenue minus expenses other than debt-servicing costs -- is expected to turn black in fiscal 2027 with a surplus of about 1.8 trillion yen ($16.4 billion) under the most optimistic scenario, the Cabinet Office said in its biannual projection.
The previous forecast released in January said the balance would still be in the red with a 2.8 trillion yen deficit in the fiscal year through March 2028, and turn black in fiscal 2029.
However, the latest projection suggests Japan will miss its goal of achieving fiscal health in fiscal 2025.
The office said meeting the target in fiscal 2025 would “come into sight” if the world’s third-largest economy can improve the balance by around 1.3 trillion yen per year through efforts to streamline its expenditure. The upwardly revised fiscal outlook was due partly to the government’s large-scale stimulus that has “protected the domestic economy” amid the pandemic and helped the tax revenue grow more than expected, a government official told reporters.