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.
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