Japanese Prime Minister Sanae Takaichi has indicated a shift in economic strategy by abandoning the country’s longstanding objective of achieving an annual primary budget surplus. This marks a departure from fiscal conservatism, signaling a greater willingness to use government spending as a tool to stimulate economic expansion.
During a parliamentary session in the lower house, Takaichi explained that the government will no longer assess its primary balance target on a year-by-year basis. The primary balance, which measures the gap between national expenditures and revenues excluding debt servicing costs, had been a central benchmark for Japan’s financial planning. By removing the rigid annual review, the administration is allowing more flexibility in budgeting to support growth-oriented policies.
This adjustment reflects a broader recognition that strict adherence to deficit reduction may hinder efforts to sustain economic momentum, particularly amid ongoing challenges such as sluggish wage growth and inflationary pressures. The revised approach suggests a more pragmatic stance toward public finances, prioritizing economic performance over short-term fiscal discipline.
— news from Bloomberg
— News Original —
Japan’s Takaichi Shifts Economic Policy With Looser Budget Goal
Japanese Prime Minister Sanae Takaichi signaled her determination to ramp up the active use of fiscal policy to power economic growth by dropping an annual budget-balancing goal that favors financial orthodoxy.
Speaking in the lower house of parliament Friday, Takaichi said the government’s long-held target of achieving a primary balance surplus will no longer be reviewed on a single-year basis. The primary balance refers to the difference between government spending and revenue after factoring out debt-servicing.