TOKYO, May 23 (Reuters) - Japan must adhere to the government's goal to achieve a balanced budget by the fiscal year ending in March 2021, Finance Minister Taro Aso said, in a resolve to push for fiscal consolidation to fix the country's tattered finances.
Aso made the pledge at a meeting of Prime Minister Shinzo Abe's top economic advisory council, which deliberated on Tuesday over the government's annual key economic and fiscal policy guidelines due around the middle of the year.
The guidelines will provide the basis for compilation of next fiscal year's annual state budget from April 2018.
"Achieving a primary budget surplus in fiscal 2020 is the least of our responsibilities for future generations. We are not allowed to take down the flag," Aso said in a document submitted to the Council of Economic and Fiscal Policy.
The primary budget balance - excluding new bond sales and debt servicing - serves as a key barometer of government efforts to balance budget spending with revenue.
The budget-balancing goal remains elusive. The government's own calculations show a primary budget surplus won't be met by end-March 2021, without further efforts to boost tax revenue and cut spending.
Given Japan's huge public debt - at more than twice the size of its economy - any signs the government is giving up on fiscal discipline could invite a bust in the country's finances or runaway inflation that would deal a blow to the general public.
Aso urged the government to keep a cap on bulging social security spending in a fast-aging society when compiling the fiscal 2018 budget, and called for efforts to further curb such outlay.
Fiscal consolidation should contribute to growth and boost tax revenue as it helps ease concerns about the future and stimulate consumer spending and business investment, Aso noted.
He added that fiscal reform should strengthen Japan's fragile fiscal structure and win the trust of the international community.
"Underlying government bond yields remain very low but we should assume interest rates will outpace nominal economic growth if Japan manages to escape deflation," Aso noted, calling for prudent fiscal policy. (Reporting by Tetsushi Kajimoto; Editing by Jacqueline Wong)