At the Council on Economic and Fiscal Policy held on the 21st, the Cabinet Office presented the latest estimate of the "primary balance," which indicates the soundness of public finances.
Even assuming that high economic growth will continue, the achievement of profitability is expected to be in 2027, two years behind the government's target.
The government has set a goal of turning the national and local governments into the black in 2025, which is an index called "primary balance," which indicates how much tax revenue can cover the cost of policy without relying on government bonds.
The Cabinet Office showed the latest estimation at the Council on Economic and Fiscal Policy held on the 21st, and even assuming that economic growth of about 2% per year will continue in real terms, it will be in the black with a deficit of 2.9 trillion yen in 2025. It is said that the conversion will be in 2027, which is two years behind the government's target.
According to the estimate shown in January, the time to return to profitability is 2029, which is four years behind the target, but it was moved forward two years because the tax revenue of last year increased significantly from the estimate.
The Cabinet Office also presented a trial calculation that it would be possible to achieve a surplus of 1.7 trillion yen in 2025 if spending reforms are implemented after achieving high economic growth.
On the other hand, assuming that economic growth is about 1% per year, it is assumed that the deficit will be 7.9 trillion yen in 2025 and 6 trillion yen in 2030.
The government has stated in this year's "Honebuto no Hoshi" policy that it will verify the impact of the new corona on economic finance and reconfirm the target year, and if the spread of infection prolongs the impact on the economy. There is also concern that the financial situation will continue to deteriorate.
Severe situation even if the debt balance is reduced
The government has set a goal of turning the "primary balance" into the black and steadily reducing the ratio of debt to GDP for fiscal consolidation, but it will not be achieved unless high economic growth is achieved. It's a tough situation.
According to the "Medium- to long-term economic and financial estimates" released by the Cabinet Office on the 21st, the total debt balance of the national and local governments at the end of last year was 1121.6 trillion yen.
This is more than 40 trillion yen more than the estimate shown in January last year before the spread of the new coronavirus infection, and the size of the debt balance is a huge amount that is more than double the GDP.
The government has set a goal of steadily reducing the ratio of debt to GDP, but according to estimates, the ratio of debt to GDP is based on the assumption that economic growth will continue to be as high as 2% per year. It peaked at 2.11 times this year and will continue to decline from next year onward, and will drop to 1.67 times in 2030, the final year of the trial calculation.
However, assuming that economic growth is about 1% per year, the ratio of debt balance will not be less than twice GDP even in 2030, and high economic growth will be realized while fiscal spending is swelling in response to corona. Otherwise, achieving the goal will be difficult.
Prime Minister Emphasizes the possibility of profitability in 2025 through economic growth and reform
At the Council on Economic and Fiscal Policy, Prime Minister Suga emphasized that it is possible to achieve a surplus in the "primary balance" in 2025 by achieving economic growth and continuing spending reforms, prioritizing budgets and reforming regulations. He expressed his intention to secure employment and raise wages.
At the meeting, Prime Minister Suga said, "For future economic and financial management, we will do our utmost to end the infection of the new corona as soon as possible by proceeding with vaccination while thoroughly implementing infection prevention measures." ..
And about the latest estimate of the "primary balance" for the national and local governments presented at the conference, "Last year's tax revenue was the highest level ever. Reflecting this, the estimate shows economic growth. By achieving this and continuing spending reforms, it was shown that the "primary balance" will be in the black in 2025. "
On top of that, Prime Minister Suga boldly focused on budgets and tax systems for green and digital, vibrant regional development, and measures against the declining birthrate, promoted drastic regulatory reforms, and reviewed existing systems on a zero basis to secure employment. He expressed his intention to raise wages and expand investment.
Prime Minister's Special Measures for Employment Adjustment Grants Show the idea of maintaining until the end of the year
In addition, Prime Minister Suga intends to maintain special measures for employment adjustment subsidies until the end of September, targeting areas where a state of emergency has been declared, saying that the impact of the new coronavirus on the economy has been prolonged. Was shown.
At the Council on Economic and Fiscal Policy, the Council on Economic and Fiscal Policy discussed how to improve the environment for raising the minimum wage this year, based on the fact that the council of the Ministry of Health, Labor and Welfare has compiled a guideline for raising the minimum wage by 28 yen, which is the largest ever in all prefectures. It was.
Prime Minister Suga said, "Amid the prolonged impact of the new Corona, many small and medium-sized enterprises are in a difficult business situation, and the business will continue to exist, taking into account the decrease in sales and the increase in costs associated with the increase in the minimum wage. We need to provide careful support to maintain employment. "
On top of that, we will maintain special measures for employment adjustment subsidies until the end of September for areas where emergency declarations have been issued, and relax the requirements for subsidies, which are strongly requested by businesses, and projects. He expressed his intention to raise the subsidy rate for reconstruction.
Prime Minister Suga said, "We will provide detailed support in response to the impact of the new corona and the situation of raising the minimum wage."