Japan to make lowering debt to GDP ratio a new fiscal discipline target - RTRS

On Friday, Reuters out with latest headlines from the Japanese government, stating that they have agreed to make lowering the debt to GDP ratio a new fiscal discipline target.

Key Points:

The government said it was not abandoning its previous target of reaching a primary budget surplus in fiscal 2020

The new target is a subtle shift in policy that poses large risks. The government has more freedom to spend big and avoid raising taxes, but this could eventually complicate the Bank of Japan's government debt purchases for quantitative easing.

The new fiscal discipline target is part of Prime Minister Shinzo Abe's annual roadmap for fiscal and economic policy, which his top advisory panel approved after a meeting on Friday.

Abe's cabinet is likely to formally sign off on the roadmap at the end of next week.

Japanese PM Abe said at the end of the advisory panel's meeting, “The goal is to achieve a primary budget surplus and lower the debt-GDP ratio at the same time."