fiscal reform

Japan’s Path to Sustainable Growth: Targeting Net Domestic Fund Demand Over Primary Balance Surplus

As a new fiscal discipline, we need a new fiscal target that can take into account macroeconomic conditions, guiding net domestic fund demand to be around -5%. The previous fiscal target of achieving a primary balance surplus was flawed because it aimed to achieve a surplus regardless of macroeconomic conditions, making it impossible to sustainably expand the size of the economy.