TOKYO Jan 22 Japan's government should stick
with fiscal discipline targets that aim to return the budget to
a primary surplus by fiscal year 2020 to ensure trust in public
finances, a leading government panel said on Tuesday.
The government should also limit new bond issuance as much
as possible when compiling the budget for fiscal 2013 to
maintain trust in the government bond market, the Council on
Economic and Fiscal Policy (CEFP) said, according to a draft
distributed to reporters.
The CEFP also reiterated that the government plans to lay
out more detailed plans to improve public finances by the middle
of this year, as Prime Minister Shinzo Abe embarks on a bold
plan to end deflation with large-scale fiscal spending and
aggressive monetary easing.
Abe's government faces a delicate task because pledges to
increase fiscal spending could cause bond yields to rise, which
could hurt the economic outlook.
Japan's government has been aiming to halve the ratio of the
primary budget deficit to gross domestic product in fiscal 2015
from the level in fiscal 2010. A primary budget balance excludes
debt servicing costs and income from bond sales.
The next step is to achieve a primary budget surplus, which
is likely to require major spending cuts and steps to increase
revenue as Japan's public debt burden is already the worst among
major economies at more than twice the size of its $5 trillion
For fiscal 2013, which starts in April, Finance Minister
Taro Aso has said he does not want new bond issuance to exceed
the 44 trillion yen ($490 billion) initially planned for the
current fiscal year.