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.
