UPDATE 2-Japan aims to slash budget deficit by 2020 -Nikkei

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TOKYO, April 21 (BestGrowthStock) – Japan will set numerical targets
for cutting its huge budget deficits by about 30 trillion yen
($322 billion) within a decade, the Nikkei business daily
reported on Wednesday without citing sources.

The government will include the targets in a fiscal reform
bill it is drafting together with ruling coalition officials, the
business daily said. [ID:nTOE62T083]

Ambitious targets are unlikely to be met without tax hikes,
but the paper said it was not known if the legislation would
include the timing and size of any consumption tax hike.

One target is to cut the ratio of the budget deficit to gross
domestic product (GDP) to less than about 6 percent of GDP by
fiscal 2015 and 3 percent by fiscal 2020, the Nikkei said.

The Cabinet Office estimates that the deficit will come to
9.4 percent of GDP, or about 44.8 trillion yen, in the fiscal
year that began this month.

Finance Minister Naoto Kan has said he wants to introduce the
fiscal bill during the current session of parliament ending in
June, though with upper house elections expected in July it is
unclear whether this will happen. [ID:nPOLJP]

Bond investors are worried about Japan’s bulging debt, which
is approaching 200 percent of gross domestic product, and fear
the Democratic Party-led government will spend more to bolster
the economy ahead of the mid-year elections.

The Nikkei said the targets will be expressed either in terms
of the primary balance, which shows the degree to which the
government can cover its spending without issuing bonds, or the
deficit-to-GDP ratio, a yardstick used by the European Union.

The Cabinet Office estimates that the primary balance will
show a deficit of 33.5 trillion yen this fiscal year.

The draft bill targets halving the primary balance deficit of
the central and local governments in fiscal 2015 and posting a
surplus by fiscal 2020, the daily said.

Japan’s annual budget for the current fiscal year hit a
record 92.3 trillion yen, with an all-time high of 44.3 trillion
yen in new bond issuance highlighting its public finance woes
amid the threat of a credit ratings downgrade.
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($1=93.20 Yen)
(Reporting by Tetsushi Kajimoto in TOKYO, Vinay Sarawagi in
BANGALORE; Editing by Hugh Lawson)

UPDATE 2-Japan aims to slash budget deficit by 2020 -Nikkei