TOKYO, Jan 8 (Reuters) - Japan expects its primary balance deficit for the year to March 2012 to climb to about 15 trillion yen ($162 billion), or more than 2 percent of nominal gross domestic product (GDP), the Nikkei business daily reported on Thursday.
The government said this week that its self-imposed goal of achieving a primary balance in the budget by March 2012 was looking increasingly tough as Japan sinks deeper into recession due to the global financial crisis. [ID:nT399]
Under economic policy guidelines drawn up in 2006, Japan had pledged to cut spending and aimed to balance the budget, excluding debt issuance and servicing costs, by March 2012 to help fix its tattered finances.
But deepening economic woes are forcing the government to prioritise spending to support the economy rather than steps to restore fiscal health. Japan’s fiscal debt is already running at 150 percent of GDP, and falling tax revenues and rising social security costs due to an ageing population mean this ratio — the highest among industrialised nations — is likely to keep rising.
To calculate the primary balance deficit, the government has assumed that nominal GDP will grow around 2 percent in the year to the end of March 2012 and that the sales tax will rise 1 percentage point by then, the Nikkei reported.
The figure will be announced later this month in an outline of the government’s fiscal policy, the Nikkei said. ($1=92.56 Yen) (Reporting by Yoko Kubota; Editing by Hugh Lawson)