Japan national debt reaches record high

Source:Global Times-Agencies Published: 2013-8-11 23:48:01

Japan's national debt has topped 1 quadrillion yen ($10 trillion) in the latest figures by the country's Ministry of Finance Friday, a record that underlines Tokyo's struggle to curb its huge borrowing.

The national debt reached 1.008 quadrillion yen by the end of June, said the ministry, which means each Japanese citizen on average shoulders 7.92 million yen in debt.

Tokyo has the dubious distinction of having the biggest debt pile among industrialized nations, more than twice the size of its GDP.

The lion's share of that debt is from long- and short-term Japanese government bonds, as well as other borrowing.

The staggering figure, about 1.7 percent higher than the previous quarter, comes after Japan pledged to slash its budget and get spending under control.

However, it seems that Japan has not faced a public debt crisis like the kind seen across the debt-riddled eurozone, largely because most of its low-interest debt is held domestically rather than by international creditors.

But the International Monetary Fund (IMF) and other institutions have issued warnings about Tokyo's ever-increasing borrowing, after a series of sovereign credit rating downgrades in recent years. The IMF called on Japan to adopt a "credible" fiscal plan to repair its books, including raising sales taxes to generate revenue.

Japanese Prime Minister Shinzo Abe's government is mulling whether to go ahead with the sales tax rises that would double the rate to 10 percent by 2015.  Meanwhile, the government is also hesitating over whether to increase consumption tax, another key source of new income.

But some fear that the tax hikes would hit the recovery and stall Abe's economy-boosting plan dubbed "Abenomics," and that a drive to stimulate the world's third-largest economy could be cut short.

Reform of the social security system is also critical in the fiscal reconstruction plan, which requires the aged population with high income to contribute more medical fees and taxes.

Global Times - Agencies

Posted in: Economy

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