Japanese Minister Alerts to “Unparalleled” Deterioration in Public Finances
Japan Prime Minister Warns of Dire Fiscal Situation After Pandemic and Inflation
Prime Minister Fumio Kishida of Japan held a speech at the first parliamentary session of the year, warning that there is a “need to guarantee sufficient fiscal space” in the country due to swelling public debt that has been worsened by both the pandemic and global inflation.
Taro Suzuki, the head of the Finance Ministry, said that the government has taken action to battle the coronavirus pandemic and enacted supplementary budgets but is still facing “a fiscal situation of increasing severity at an unprecedented level”.
The Prime Minister’s policy is to focus on promoting robust economic revitalization before undertaking a fiscal adjustment that the Executive aims to approve a record budget of 114,380 trillion yen for the next fiscal year. This budget will include additional items to reduce the cost of raw materials and energy for individuals and companies, as well as an increase in military spending to bring Japan to the level of NATO nations.
Japan’s public debt is the highest among the G7 countries and stood at 262.5% of its GDP in 2021. Most of the government bonds are held by the country’s Central Bank,which owns over 51% of them.
The Central Bank is being pressured to raise its ultra-low reference interest rates, which will cause an increase in financing costs for the state. Despite this, Suzuki maintained that the goal is to reach a balanced public accounts by 2025.
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