Exclusive: Japan government forecasts show Abe missing budget-balance promise By Takaya Yamaguchi TOKYO (Reuters) - Japanese government calculations indicate that Prime Minister Shinzo Abe cannot meet his budget-balancing promise in coming years on the current course, suggesting he may come under greater pressure from fiscal hawks for future tax increases. Forecasts by the Finance Ministry, reviewed by Reuters on Friday, show that even in the rosiest of four scenarios, the government will run a primary budget deficit - which excludes debt service and income from debt sales - for the fiscal year to March 2021. Under existing policy, Abe's government has promised to halve the primary deficit by fiscal 2014/15 and bring it into balance five years later. Finance Minister Taro Aso reaffirmed that goal on Friday at the opening of Parliament. Private economists have long considered the government's fiscal-reform goals to be ambitious, but the new forecasts represent the first time that official figures have essentially confirmed that view. Ministry officials had no comment on the scenarios, which have not been made public. Fiscal reform is an urgent task for the world's third-biggest economy. Years of recessions and tepid growth have crimped tax revenues, while massive government stimulus measures and a rapidly ageing society have forced up government spending. The result is public debt far above 200 percent of GDP, the biggest burden in the industrial world. A Reuters survey of 400 companies on Friday found that 80 percent expect a euro-style debt crisis in Japan in the next decade. Abe last year took the biggest step in 15 years to rein in Japan's debt, deciding to raise the national sales tax to 8 percent from 5 percent in April. The new ministry documents, to be used in budget debates in the next session of Parliament from next week, show that the tax increase and the boost to growth from "Abenomics" mean the government is now ahead of initial projections for halving the primary deficit in the first stage. But the new initial projections for the fiscal 2020/21 target year depict Japan's inexorable budget and demographic trends swamping the government's fiscal goals. Even assuming robust annual economic growth of 3 percent and further steps to rein in social security spending, Japan will run a primary deficit of 6.6 trillion yen ($64 billion) in the 2020/21 fiscal year, the ministry calculates. With a more typical growth rate of 1.5 percent, the deficit widens to 9.1 trillion yen. If no steps are taken to curb the natural increase in welfare spending, the ministry calculates, Japan will run a deficit that year of 9.1 trillion yen if growth is 3 percent, ballooning to 14.1 trillion yen at 1.5 percent growth. The forecasts assume that Abe will proceed with a further sales-tax increase, to 10 percent, in October 2015, although confirming that hike promises to be a politically contentious for the premier and is by no means certain. Given that Japan is on course to remain in deficit even if it curbs spending, the forecasts may mobilize ministry fiscal hawks to push for Abe to ratify the next tax hike, fend off calls for corporate tax cuts and even look for further revenue increases. Writing by William Mallard; Editing by Neil Fullick