[TOKYO] Japan should focus on spending cuts in meeting its pledge to turn its primary budget deficit into a surplus, though setting rigid numerical targets would be inappropriate, according to a draft proposal by the ruling party's panel on fiscal reform.
While the central bank's massive stimulus programme has kept borrowing costs very low, Japan's fiscal balance will worsen when the Bank of Japan seeks to end its ultra-loose policy and lead to a rise in interest rates, according to the draft obtained by Reuters on Tuesday. "There is no room to delay" the fiscal 2020 deadline the government set for itself in turning Japan's primary budget deficit into a surplus, according to the draft.
Relying just on economic growth would be insufficient, the proposal said, urging the government to seek ways to cut spending in areas including social welfare.
The proposal, to be presented to a meeting of the ruling Liberal Democratic Party's panel on fiscal reform on Wednesday, will serve as a basis for the party's debate on ways to rein in Japan's massive fiscal deficit.