Gov't aims to halve ratio of primary balance deficit against GDP - News Release - News Release

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Gov't aims to halve ratio of primary balance deficit against GDP

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According to The Mainichi Daily News, The government aims to halve the ratio of the primary balance deficit against the gross domestic product (GDP) within the next five years, it was learned on Monday.  According to a preliminary draft of its reform program for 2009, the government will aim to reduce the ratio of outstanding debts incurred by the central and local governments against GDP in the early 2020s, after at least stabilizing the ratio by the mid-2010s.  Specifically, the government will strive to achieve a primary balance surplus within the next 10 years by halving the ratio of primary balance deficits of the central and local governments vis-a-vis GDP within the coming five years.  The draft was to be presented at a meeting of the Council on Economic and Fiscal Policy on Tuesday and is set to be approved at a Cabinet meeting on June 23.  Japan ranks the worst among developed countries in terms of the ratio of the central and local governments' outstanding debts against GDP. The government hopes the new financial goals will demonstrate its efforts to improve state finances that have been hard hit by the recent economic crisis.  Previously, the government had aimed to achieve a primary balance surplus by fiscal 2011 -- a goal set under the basic reform program for 2006 that was worked out by the administration of former Prime Minister Junichiro Koizumi.  However, the fiscal target has turned out to be unfeasible due to declining tax revenues and large-scale economic stimulus measures amid the financial crisis, prompting the government to establish a new target under the basic reform program for 2009.  The draft highlights that Japanese society is facing "a quiet crisis" amid the declining birthrate and aging population, widening income gaps and rising unemployment among youths. "The government needs to use all its power to promote the realization of a 'secure society,' " the draft says.  The draft also represents a departure from the structural reform policy set out by former Prime Minister Koizumi, which has often been blamed for widening income gaps and employment difficulties. While the Koizumi administration advocated privatization and streamlining of governmental organizations, the draft upholds "a reform into a slim, functional government, without resorting to dualism (such as small government versus big government)."

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