Japan is on course to break a pledge to balance its budget by 2020, according to a new government forecast that sets up a battle between fiscal hawks at the ministry of finance and doves in the cabinet of Shinzo Abe, prime minister.
Private-sector economists have long seen as ambitious the government’s goal of erasing its primary deficit – the gap between revenues and expenditure, excluding debt payments and bond issuance.
Yet, last week the ministry of finance (MoF) made its first admission that the target was unlikely to be hit, saying that even with the most optimistic assumptions for growth and cuts to spending, the deficit would be as wide as Y6.6 trillion ($64 billion) in the 2020 fiscal year.
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