Balanced budget goal still a mirage

Tokyo: Japan's government edged away yesterday from its self-imposed goal of balancing the budget, acknowledging that the target was becoming harder to meet as the global financial turmoil pushes the economy deeper into recession.

Under economic policy guidelines, which were drawn up in 2006, Japan pledged to cut spending and aim to balance the budget, excluding debt issuance and servicing, by March 2012 to fix its tattered finances.

But this goal is becoming increasingly tough to meet, the government said in a draft outline of its midterm fiscal policy yesterday, in a sign that the deepening economic woes were forcing it to prioritise spending to support the economy over restoring fiscal health.

Still, Prime Minister Taro Aso said efforts to meet the target would continue.

"While dealing with unprecedented uncertainties for the economy at home and abroad, we need to achieve the target as soon as possible," he told parliament yesterday.

The draft outline, submitted to the government's top economic advisory panel yesterday, came as Japan attempts to balance the need to restore already tattered public finances and boost spending to prop up a faltering economy.

Japan is already in recession, with carmakers Toyota and Honda slashing output as demand falls.