Photo/IllutrationPrime Minister Shinzo Abe addresses the Council on Economic and Fiscal Policy meeting held on Jan. 17. (Takeshi Iwashita)

The government on Jan. 17 released a grim forecast for eliminating its massive deficit by fiscal 2025, a target it set two years ago.

A recent drop in government tax revenues was viewed as the primary factor behind the more pessimistic outlook released by the Cabinet Office.

Even in the most optimistic scenario for economic growth, the government deficit for fiscal 2025 was forecast to total 3.6 trillion yen ($33 billion). In July 2019, it projected the deficit would stand at 2.3 trillion yen.

The government's target for achieving a surplus in its primary balance would mean that tax and other revenue would cover programs from social security to public works projects without having to issue new government bonds.

The Cabinet Office releases its projections for reaching a primary balance surplus twice annually based on the latest economic indicators.

The latest projections were presented on Jan. 17 to the Council on Economic and Fiscal Policy.

Under the rosy scenario of achieving a real growth rate of about 2 percent and a nominal growth rate of about 3 percent for gross domestic product in the first half of the 2020s, a surplus in the primary balance would only be achieved in fiscal 2027 at the earliest. That was the same projected period as the estimate released in July.

While the latest forecast is more pessimistic about achieving the surplus goal, one Cabinet Office official said, “We will be able to take aim at achieving the goal if we push forward with reforming government expenditures in a steady manner.”

Under the baseline case scenario in which current economic conditions are projected as continuing into the future, a surplus in the primary balance would not even be achieved in fiscal 2029, the last year under the calculation exercise.