Tokyo: Japan will set a goal of bringing its primary budget balance into the black within a decade in a fiscal reform strategy to be unveiled this month, Prime Minister Naoto Kan said, as part of efforts to rein its huge public debt.
Kan, who took up his post after his unpopular predecessor quit abruptly this month, also repeated his pledge to keep fresh government bond issuance at or below this fiscal year's record 44.3 trillion yen (Dh1.77 trillion) in the year from next April.
"We aim to include it in our fiscal goals," Kan told the lower house of parliament yesterday, referring to the target for the primary balance.
The primary balance, or the budget balance excluding revenue from bond sales and debt servicing costs, is in deficit by 33.5 trillion yen this fiscal year, or about 7 per cent of GDP.
The government, faced with the task of reining in public debt that is nearly twice the size of GDP, plans to lay out medium- and long-term fiscal targets before a G20 summit in Toronto next week.
Rating agencies have warned that Japan's sovereign debt rating could be cut unless Tokyo crafts a credible plan to fix the country's tattered finances.
There is no concern about Japan's ability to fund its deficits in the near term because of the country's vast pool of domestic savings.
But fears that this could change in the long term as the ageing population starts drawing on savings have raised demands for protection of Japanese government bonds in the credit default swaps market.
Kan has warned that Jap-an risks defaulting on its borrowing if it fails to rein in its massive public debt.
