World’s heaviest burden: Japan’s debt tops 1 quadrillion yen
Japan’s national debt exceeded 1,000 trillion yen, or $10.46 trillion, for the first time. It’s now well above 200% of the country’s GDP and is larger than that of Germany, France and the UK combined.
Japan has increased borrowing this year to spend more on the country’s infrastructure as part of an ambitious program of economic stimulus aimed at ending 20 years of stagnation and falling prices. Despite economic hardship, overall social welfare skyrocketed – benefits rose to 103 trillion yen in 2010 from 47 trillion yen in 1990, Bloomberg reports.
Over 90 percent of Japan’s debt is tied to the yen and belongs to domestic investors, the Wall Street Journal reports.
The world’s heaviest debt burden will weigh on Prime Minister Shinzo Abe when next month he decides whether to double sales tax. Japan’s government is mulling hiking the 5 percent sales tax to 8 percent in April and then to 10 percent in October 2015.
“Ballooning public debt underlines the need for Abe to push for a sales-tax increase,” Bloomberg quotes Long Hanhua Wang, an economist at Royal Bank of Scotland Group in Tokyo. The International Monetary Fund and the Bank of Japan are also among the advocates of a higher tax.
However, with a higher levy on consumers set to drag on growth, Moody’s Investors Service warns that worsening finances would eat into confidence in government bonds.
Fiscal deficit is also expected to expand this year to 10.3 percent of GDP from 9.9 percent in 2012.
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