Japanese Minister of Finance warns of “unprecedented” public debt amid pandemic and a new rearmament policy proposed
Japan’s Minister of Finance, Shunichi Suzuki, warned on Monday (01.23.2023) of the “unprecedented” deterioration seen in the country’s fiscal health, due to public debt aggravated by the pandemic and global inflation.
During his speech to the first parliamentary session of the year in Japan, Suzuki stressed the importance of “guaranteeing sufficient fiscal space to prevent the credibility of the country and the well-being of its citizens from being undermined”.
Currently, Japan’s public debt is the highest among the G7 countries, according to the International Monetary Fund, standing at 262.5 percent of its GDP in 2021, with most of its government bonds held by the nation’s central bank – more than 51 percent.
Maintaining focus on economic revival before a fiscal adjustment, Suzuki stated that “after taking actions to address the coronavirus pandemic and agreeing on supplementary budgets, we are facing a fiscal situation of increasing severity at an unprecedented level”.
In his opening speech of the first parliamentary session of the year, Prime Minister Fumio Kishida added that Japan is presently in the most critical security environment since the conclusion of World War II, and thus proposed a military rearmament policy under the newly adopted security strategy.
Kishida also proposed new policies to boost the declining birth rate. With the aim of these reforms, Kishida further mentioned how active diplomacy should be prioritized with “defense power to back it up”.
The Executive is expected to grant a record budget of 114,380 trillion yen (806,000 million euros) for the next fiscal year. This includes additional items to mitigate the growing cost of raw materials and energy for individuals and companies. In addition, the budget also includes an increase in military spending, which is expected move to around 2% of gross domestic product (GDP) in the next five years, on par with the NATO countries.