TOKYO, Jan 22 Reuters Japan39;s primary budget balance is expected to remain in the red in the fiscal year 202526 when policymakers had hoped to achieve a surplus, the Cabinet Office estimates showed, highlighting the stiff costs of servicing a record public debt.

The primary balance a key measure of how much Japan39;s national and local governments finance policy measures without relying on debt was estimated at a deficit of 1.1 trillion yen 7.44 billion, versus the previous forecast of 1.3 trillion yen shortfall seen in July.

Saddled with the industrial world39;s worst public debt at more than double the size of its economy, Japan has been focussed on improving its primary budget but debt servicing costs and COVIDrelated expenses have hampered its efforts.

The government has targeted bringing its primary budget balance, which excludes new bond sales and debt servicing costs, into the black by fiscal year ending March 2026.

Japan39;s primary budget has largely been in deficit in the postwar era with the exception of the asset bubble period between 1986 and 1991.

Having pushed back the goal post several times, the Cabinet Office forecasts show Japan is yet again unlikely to balance the primary budget by the target year, a view shared widely with privatesector economists.

The latest estimate reflected higher than expected nominal GDP growth as well as streamlining spending, both of which contributed to improving the budget balance slightly, while higher inflation…