By Daniel Leussink and Takaya Yamaguchi
TOKYO (Reuters) - Japan will stick to a target of achieving a primary budget surplus by fiscal 2025 in projections to be presented next week, sources with knowledge of the matter said, even as spending to deal with the COVID-19 crisis balloons.
But the government may be forced to push back the estimated timing for achieving the target if new state of emergency measures to contain the pandemic dent growth, they said.
"There's no reason to change at this time," one of the sources said, referring to the fiscal target.
"There's no change to Japan's stance of aiming to achieve fiscal consolidation by revitalising the economy," the source told Reuters.
Another source, however, said the situation surrounding Japan's finances could shift if a coronavirus state of emergency pushes the economy into another sharp contraction.
"It will raise the question of whether the primary balance target of fiscal 2025 can really be achieved," the source said.
Three government sources spoke on condition of anonymity because they were not authorised to comment publicly.
Japan already rolled out about $3 trillion in spending to cushion the economic blow from COVID-19, adding to public debt that is already 2.5 times the size of its economy.
In its previous long-term fiscal projections issued in July last year, the government kept its target of turning the budget to surplus by fiscal 2025.
But it pushed back the estimated timing of when Japan would achieve a budget surplus by two years to fiscal 2029, making the primary budget goal largely symbolic.
The government is set to maintain the 2025 budget goal again when it presents its long-term fiscal plan at an economic council meeting on Thursday, the sources said.
The sources did not say whether the government planned to amend the estimated timing for achieving the budget surplus to 2030 or later.
That would depend on how the government factors the impact of stimulus measures into its calculations, a fourth source said.
Japan faces a growing challenge of restoring fiscal health as some policymakers call for more spending to overcome the pandemic, which remains the government's top priority.
A surplus on the primary balance, which excludes new bond sales and debt-servicing costs, would mean the government's revenue is larger than its expenditure.