Japan vows to stick to budget balancing goal despite defence boost
FILE PHOTO: Japanese Finance Minister Shunichi Suzuki attends the G20 Finance Ministers Meeting in Nusa Dua, Bali, Indonesia July 16, 2022. Sonny Tumbelaka/Pool via REUTERS
TOKYO :Japan must stick to its target of a primary budget surplus by the 2025 fiscal year, Finance Minister Shunichi Suzuki said on Friday, even as a planned increase in defence spending raises the spectre of worsening already dire public finances.
"It's true, that's a lot of money" Suzuki said, referring to a plan for 43 trillion yen ($315.46 billion) in defence spending over the next five years.
"But we must stick to the aim of achieving a primary budget surplus by fiscal 2025," Suzuki said when asked about how increased defence spending may affect Japan's fiscal target.
Japan aims to achieve a primary budget surplus, excluding new bond sales and debt servicing costs, by the end of the 2025 fiscal year, in March 2026.
"Fiscal discipline must be maintained," he added.
Prime Minster Fumio Kishida told ruling coalition tax chiefs on Thursday to work out a plan by the end of the year for increasing taxes to fund defence spending.
Kishida's government is considering raising taxes in stages after fiscal 2023 and towards 2027 to help fund a plan to secure funding for the planned 43 trillion yen in defence spending for the five-year, mid-term defence plan.
After fiscal 2027, the government will need to earmark additional spending worth 4 trillion yen a year, of which some 1 trillion yen would be paid by tax increases.
"It's important to gain consent from the public as we are going to ask them to shoulder the burden," Suzuki said.
He brushed aside the possibility of issuing additional debt.
"It's difficult to consider debt issuance as stable sources of funding strengthened defence capabilities over time," he said.
Instead, the government would focus on reforming spending and tapping unused budget and non-tax revenue, and put them together in a pool of funds for strengthening defence.
Kishida has announced plans to lift defence spending to an amount equivalent of 2 per cent of gross domestic product within five years, from 1 per cent now.
($1 = 136.3100 yen)
