G20 Leaders Looking for Lessons to Learn on Japan Debt Balancing Budget

The leaders of Group of 20 (G-20) member countries are paying close attention to whether Japan can achieve its goal of balancing the debt-ridden state budget in accordance with its pledge.

The mid-term fiscal plan set a goal of achieving a surplus in the primary balance — government net borrowing or net lending excluding interest payments on consolidated government liabilities — by fiscal 2020.

However, it remains to be seen whether the plan — which is not based on the assumption that the consumption tax will be raised from the current 5 percent to 8 percent in April 2014 as scheduled — will win the understanding of the international community at the G-20 summit meeting in September.

At the G-20 summit in Russia on Sept. 5 and 6, the leaders of developed countries will explain the road maps toward balancing their respective state budgets.

The international community views it as indispensable for Japan to raise the indirect tax levied virtually all goods and services as planned in order to achieve its goal of rehabilitating state finances.

In its annual report on the Japanese economy released on Aug. 5, the International Monetary Fund (IMF) underscored the importance for Japan to raise the sales tax as planned in order to maintain international confidence in the Japanese government in its efforts to balance the budget.

via Mainichi

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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
Alfonso Esparza

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