Yoshifumi Takemoto, Tetsushi Kujmoto

TOKYO (Reuters), Reuters was told by two sources who knew the situation that Japan’s government didn’t mention a specific time frame for balancing primary budget.

The government previously promised to attain a primary budget surplus. That excludes debt servicing and new bond sales. It was seen as a challenging target considering Japan’s current financial situation.

As part of the efforts to reduce the amount of public debt in Japan, the budget balancing goal has been a crucial indicator for the government.

Japan’s inability to include the target year on its mid-year policy roadmap may raise concerns about the country’s ability to restore its public finances.

Daiju Aoki from UBS Sumi Trust Wealth Management, said that “this means the government might deliver a message about it prioritising growth and growth-oriented investing.” That would encourage fiscal spending to support growth investment in the short term.

Jiji newsagency said that the draft stated the target year for the current fiscal year “distort” macroeconomic policies depending on the situation at the moment. It also removed the word “fiscal 2025”, which had been included in the old roadmap.

Sources from the government said that the draft had been given consideration to Fumio Kishida, Prime Minister of Liberal Democratic Party (LDP), who is a fiscal reformist.

Those fiscal doves have put pressure on Kishida over COVID-19’s pandemic and the rising cost of living.

They are still at odds with the LDP fiscal hawks.

Jiji newsagency said that in addition to stating the government’s commitment to fiscal reform, the draft included a statement that it would pursue the previously established fiscal target. Jiji reported that this was likely due towards LDP fiscal hawks.