Fiscal consolidation index Achievement of profit target in FY2025 Achieved more difficult situation 18:56 on July 31
Regarding the "basic fiscal balance", which is an indicator of fiscal consolidation, the Cabinet Office has compiled the latest estimation that the deficit in fiscal 2025 will reach 7.3 trillion yen even if high economic growth can be achieved. Achieving profitability targets is becoming more difficult.
The government has set the goal of turning the index "basic fiscal balance" into the black by 2025, which shows how much tax expenses can cover the cost of policies for financial consolidation.
According to the latest calculations made by the Cabinet Office at the Economic and Fiscal Advisory Council, the deficit amount of the "basic fiscal balance" for this fiscal year and 2020 will increase to 67.5 trillion yen, which is more than four times the half-yearly estimation. It is expected.
The main reason for this was the additional issuance of more than 57 trillion yen of government bonds as a financial source for the two supplementary budgets to respond to the spread of the new coronavirus.
In the future, the deficit in 2025, which the government is aiming to turn into the black, is projected to reach 7.3 trillion yen, even if it is possible to achieve a high economic growth of about 2% annually. The deficit amount has doubled from the estimate half a year ago, and the profitability will be delayed by 2029, four years behind the target.
On the other hand, if economic growth of about 1% continues in the future, it will be a deficit of 12.6 trillion yen in FY2025, and a deficit of 10.30 trillion yen will remain in 2029, the final year of the trial calculation. I will.
Achieving the target of profitability is already extremely difficult, but in the future, if the economic stagnation caused by the new coronavirus continues for a long time, it is feared that the fiscal situation will deteriorate further due to further fiscal mobilization and a drop in tax revenue.
For this reason, the key to fiscal consolidation will be to recover the economy as soon as possible, enhance the growth potential of the Japanese economy, and implement further reforms in terms of both expenditure and revenue.
The "worst level" is getting worse
According to the latest calculation released by the Cabinet Office, the total balance of national and regional debts for this fiscal year is expected to reach 1146 trillion yen, an increase of 8.29 trillion yen from the previous year. This is more than twice the GDP = Gross Domestic Product.
The main reason for this was the additional issuance of more than 57 trillion yen of JGBs as a financial source in two supplementary budgets to cover the spread of the new coronavirus. Japan's finances were already at their worst levels in developed countries, but if the outbreak persists and the economy stagnates for a long time, it may need to spend more, as it has been worsened by large-scale public spending. ..
In addition, 2022, when the so-called baby boomers are 75 years old and over, is approaching two years later, and it is unavoidable that social security costs, which account for one-third of the national general account expenditure, will further increase.
The government says it will maintain its basic fiscal balance in the black by fiscal 2025 and will maintain the goal of steadily reducing its debt balance, but the road to financial consolidation cannot be foreseen and the impact of the new coronavirus has subsided. Also, the question is how to proceed with fiscal consolidation efforts.
The situation in each country
While the economy is slumping due to the spread of the new coronavirus, the financial situation of each country around the world has deteriorated due to the implementation of large-scale economic measures.
Of this, in the US, economic measures totaling 300 trillion yen have been announced by this month, and are being used to provide unemployment insurance for people who lost their jobs and support for small and medium enterprises.
In addition to issuing special treasury bonds of approximately 15 trillion yen for antivirus measures, China has also taken measures such as significantly expanding the issuance limit of bonds used by local governments for infrastructure projects from last year to more than 56 trillion yen I am.
In addition to financing support for 45 trillion yen companies, which accounts for 15% of GDP = 15% of the gross domestic product, the United Kingdom has lowered the VAT rate, which is the consumption tax of Japan, in the food and tourism sector for half a year.
In addition, Germany issued a new government bond with a supplementary budget for the first time in seven years, and is also implementing VAT reductions.
According to the IMF = International Monetary Fund, the GDP ratio of public debt in the world as a whole is estimated to be 101.5% as of last month, rising by more than 18 points from last year to the worst ever.
By country,
▽ Japan was 30 points higher than last year 268.0%
▽ America was 32 points higher 141.4%
▽ England was 16 points higher 101.6%
▽ France was 27 points higher 125.7%
▽ China was 12 points higher 64.1%. I am.
It can be seen that the debts are rapidly expanding as each country finances large-scale fiscal spending by issuing government bonds.
Experts say, "If the spread of infection does not subside, financial deterioration will continue for a long time."
Mr. Keiji Kanda, senior economist at Daiwa Institute of Research, said, ``While spending increased in response to the spread of the new coronavirus, the economy was The fiscal situation deteriorated sharply due to a sharp decline in tax revenues and both expenditures and revenues. If the spread of infection does not subside, economic activities cannot begin in earnest and fiscal deterioration is likely to continue for a long time."
In addition, he said, "In addition to how to secure the financial resources for the increased expenditure, the balance of social security burden and benefits must be reviewed at the same time as the aging population accelerates," he said. It was
Regarding financial sustainability, “I don't think the confidence in government bonds is fluctuating at the moment, but the conditions will change as the financial situation worsens, so it is necessary to step up the efforts little by little. I think it is almost impossible to achieve the target, but simply postponing it is completely meaningless, and we should show the proper course of how it can be achieved.”
In addition, in response to the spread of infection, even in emerging countries whose economic bases are weak compared to developed countries, the government's debt is being issued more and more, and the fiscal situation is deteriorating. Since developed countries may catch fire, developed countries including Japan should be actively involved in how to suppress the spread of infection in emerging countries."