Japan's Prime Minister and leader of the ruling Liberal Democratic Party (LDP) Shinzo Abe attends a news conference following a victory in the upper house elections by his ruling coalition, at the LDP headquarters in Tokyo, Japan, July 11, 2016.
Japan's primary budget deficit is expected to be around 5.5 trillion yen ($51.77 billion) in fiscal 2020, improving from a 6.5 trillion yen deficit earlier projected but still missing the goal of a surplus, government sources who have seen the figures said on Monday.
The primary budget deficit is expected to narrow partly because of the sluggish inflation outlook, with lower prices helping suppress government spending, said one of the sources, who spoke on the condition of anonymity.
The forecast is also based on the assumption economic growth would pick up, the source said.
Japan's government cut its forecasts for consumer prices earlier this month, saying it expected them to rise 1.4 percent for fiscal 2017, well below the 2 percent target the Bank of Japan says will be met during the fiscal year ending in March 2018.
The primary budget, which excludes debt servicing costs and income from bond sales, is a key measure of fiscal health. In June, Prime Minister Shinzo Abe delayed a sales tax increase to October 2019 from next April because of growing risks to the economy - a step some economists worry would worsen Japan's fiscal discipline.
(Reporting by Minami Funakoshi and Takashi Umekawa; Editing by Richard Borsuk)
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