Japan Faces Budget Deficit in Fiscal 2025

Japan is set to miss its target of achieving a primary budget surplus by the next fiscal year, with projections indicating a deficit of approximately 4.5 trillion yen ($29 billion) for fiscal 2025. This marks a significant shift from a previously anticipated surplus of 800 billion yen and reflects increased spending pressures, including a 13.9 trillion yen supplementary budget aimed at inflation relief and disaster recovery. The government faces mounting challenges as it grapples with the highest public debt in the industrialized world, now exceeding double the size of its economy, while also responding to demands for more financial support amid a fragile economic recovery. As the Bank of Japan begins to tighten its monetary policy, the urgency to rectify Japan's public finances has intensified. The ruling coalition's recent loss of parliamentary majority has further complicated fiscal planning, with potential changes to budgetary targets expected in upcoming policy guidelines. Delays in achieving a surplus have become a recurring theme since the goal was first set in the early 2000s.