The Kishida administration decided Jan. 14 to stick to the government’s fiscal rehabilitation goal of achieving a primary balance surplus in fiscal 2025.

The so-called baby boomer generation by then will be 75 years old or older, which inevitably will lead to expanded health care and other expenditures.

The administration made a meaningful decision to wean the nation from its dependence on deficit financing by the time that demographic landmark is reached.

Achieving a primary balance surplus, which means securing tax revenues that are greater than state expenditures, excluding debt interest payments, was considered a lost cause as the COVID-19 pandemic forced the government to ramp up spending.

However, a ray of hope emerged unexpectedly. While the pandemic delivered a heavy blow to the restaurant and tourism industries, many large corporations, particularly exporters, are reporting strong earnings, and the stock market is also performing well.

The government’s tax receipts in fiscal 2020, which ended in March 2021, posted a surprise increase.

According to new projections announced by the Cabinet Office, the government is on track to report a primary balance deficit of 42.7 trillion yen ($375 billion) for the current fiscal year and will still have a deficit of 1.7 trillion yen in fiscal 2025.

But if it continues to cut spending as it has done in recent years, the government will be able to secure a primary balance surplus of 2.2 trillion yen in fiscal 2025.

Some members of the ruling Liberal Democratic Party are urging the government to suspend its fiscal rehabilitation goal in favor of aggressive fiscal expansion to deal with the impact of the pandemic.

Certainly, the government needs to retain the option of flexible changes to the goal in case of any serious downturn of the COVID-19 situation. But with four years to go until the target year, it is still too early to give up on that.

Doing so now would be tantamount to abandoning its responsibility and leaving future generations to clean up the mess.

But striking the target is not without its challenges.

The government’s fiscal projections are based on the assumption that real economic growth will average 2.5 percent during the fiscal 2022-25 period.

This is a tall order for the Japanese economy, which has cleared that bar only once in the past 10 years.

Assuming such brisk economic growth seems to be a mite optimistic even if the end of the pandemic is expected to allow the economy to bounce back, at least to some extent.

The estimates are also based on the assumption that no supplementary budget will be compiled during the period.

Attaining the policy goal, therefore, requires the government to dispense with massive extra spending, which ballooned to an unprecedented level during the novel coronavirus crisis.

The record-breaking 35.9-trillion-yen supplementary budget for the current fiscal year finances not only measures to combat the pandemic but also a broad array of other expenditures that total nearly 10 trillion yen, including purchases of costly weapons systems, public works spending and investments for reducing the nation’s carbon footprint.

Many of these projects and programs are paid for from supplementary budgets every year, giving the ministries and agencies ample guaranteed funds.

Despite the fiscal crunch, the government needs to take effective policy actions to push up the nation’s low birthrates and raise wages for caregivers and childcare workers.

To secure funding for such essential expenditures, the government needs to do more to trim other outlays and raise taxes.

Successive administrations repeatedly moved back the deadlines for reaching fiscal rehabilitation goals.

Kishida should not follow in the footsteps of his predecessors by failing to honor his promise to cure the nation’s budget ills.

As the summer Upper House election draws near, the administration is likely to come under pressure to increase spending from both the ruling and opposition camps.

Even though the government has an obligation to protect the lives and livelihoods of the people, it simply cannot afford to finance nonessential projects and programs that will burn through public funds better spent elsewhere.

The Kishida administration should confront this grim fiscal reality.

--The Asahi Shimbun, Jan. 15