Japanese Prime Minister Sanae Takachi speaks during a press conference after the South Korea Asia-Pacific Economic Cooperation (APEC) summit in Gyeongju, South Korea. (Japanese Prime Minister Sanae Takachi said Monday that she will direct her Cabinet next January to begin work on setting a new multi-year fiscal target. She said her administration would not immediately abandon the current primary budget target.

The comment follows comments on Friday that her government would abandon the ongoing annual fiscal target measuring multi-year spending, which would essentially undermine the country’s commitment to fiscal consolidation. Story continues below this advertisement, Takachi’s comments last week, known as an advocate of large-scale spending, mark a major change from previous administrations, which used the annual target as a key tool to show Japan’s resolve to get its fiscal house in order in the long run.

Asked about the target, Takachi told parliament on Friday. That she would abandon the idea of using the annual primary budget balance as Japan’s fiscal consolidation target She said, “Check progress in fixing Japan’s finances by looking at its balance over a period of several years.

The primary budget balance, which excludes new bond sales and debt-service costs, measures the extent to which policy measures can be financed without resorting to debt. Japan has repeatedly pushed back the deadline for achieving a primary budget surplus. As previous governments have continued to issue massive spending packages to restart the economy and cushion shocks such as the pandemic, Takachi has repeatedly criticized the primary budget balance as a hindrance to global standards and Japan’s ability to use fiscal tools to boost growth, Takachi has said his administration will prepare a spending package aimed at cushioning the blow from rising living costs, boosting investment in growth sectors and defense.

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