Japan Keeps Budget Surplus Outlook despite Defense Boost

Society

Tokyo, Jan. 24 (Jiji Press)--Japan's Cabinet Office on Tuesday maintained its projection of achieving a primary budget surplus in fiscal 2026 under an optimistic scenario, despite a planned massive increase in defense spending.

The government agency included the projection in its medium- to long-term economic and fiscal forecasts submitted to the Council on Economic and Fiscal Policy, headed by Prime Minister Fumio Kishida.

The government expects 43 trillion yen in total defense spending over the five years from fiscal 2023 as part of efforts to raise the size of its annual defense-related expenditures to 2 pct of gross domestic product.

As in its previous forecasts released last July, the Cabinet Office said the country will be able to achieve a primary surplus in fiscal 2026 if the Japanese economy continues high growth of some 3 pct in nominal terms and 2 pct in inflation-adjusted real terms, citing measures to realize a new form of capitalism, a signature policy of Kishida.

But the assumed economic growth rates are highly optimistic. Since fiscal 1995, the nominal rate exceeded 3 pct only in fiscal 2015.

[Copyright The Jiji Press, Ltd.]

Jiji Press