Abe determined to improve Japan’s fiscal health

February 2, 2018

Tokyo- Prime Minister Shinzo Abe showed his strong determination on Friday to improve Japan's fiscal health, reiterating that the government will set a new target for achieving a primary budget surplus by summer this year.

"We will never back down on the aim of restoring fiscal health and are unwaveringly determined to push ahead with fiscal reform," Abe said in a debate on the fiscal 2018 draft budget before the House of Representatives Budget Committee.

He was answering a question from Fumio Kishida, chairman of the ruling Liberal Democratic Party's Policy Research Council, about how the government plans to turn the primary budget balance to a surplus.

The Abe government earlier planned to achieve a surplus in the primary budget balance, or the difference between state revenues and expenditures excluding new debt issuance and debt-serving costs, in fiscal 2020.

But it gave up on meeting the target because it decided to use part of expected revenue from the planned October 2019 hike in the consumption tax rate from 8 pct to 10 pct mainly to address shortages of nursery schools and make preschool education free, instead of reducing debts.

Kishida said fiscal spending intended to stimulate the economy, if it comes with no prospects for fiscal improvement, could add to concern over the future, calling for efforts to achieve a surplus at an early date.

Abe also said, "Wage hikes of 3 pct or more are what society demands," answering a question from Shigeyuki Goto, another LDP lawmaker.

"We hope to make sure that we overcome deflation by supporting momentum for wage hikes with every possible policy measure," Abe said.

Meanwhile, the prime minister said he will demand that North Korea abandon its nuclear development programs.

"The idea that North Korea can maintain part of its nuclear development for a peaceful solution to the current situation is a huge mistake," Abe said.

Yohei Matsumoto of the LDP asked the government about issues related to Pezy Computing, a Tokyo-based supercomputer developer suspected of involvement in a subsidy fraud. The company's president was appointed to a task force of the government's Council on Economic and Fiscal Policy, while a Pezy-related company received interest-free loans from an institute under the jurisdiction of the education ministry.

Economic revitalization minister Toshimitsu Motegi and education minister Yoshimasa Hayashi said separately that there was no lobbying from outside. Jiji Press