Abenomics Will Not Deliver a Balanced Budget

Japanese government calculations indicate that Prime Minister Shinzo Abe cannot meet his budget-balancing promise in coming years on the current course, suggesting he may come under greater pressure from fiscal hawks for future tax increases.

Forecasts by the Finance Ministry, reviewed by Reuters on Friday, show that even in the rosiest of four scenarios, the government will run a primary budget deficit – which excludes debt service and income from debt sales – for the fiscal year to March 2021.

Under existing policy, Abe’s government has promised to halve the primary deficit by fiscal 2014/15 and bring it into balance five years later. Finance Minister Taro Aso reaffirmed that goal on Friday at the opening of Parliament.

Private economists have long considered the government’s fiscal-reform goals to be ambitious, but the new forecasts represent the first time that official figures have essentially confirmed that view.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza