Japan’s public debt is at a record high, surpassing the 1 trillion yen threshold
On May 10, the Ministry of Finance Japan said the Japanese government’s long-term public debt exceeded 1 trillion yen ($7.7 trillion) for the first time in the 2021 fiscal year ending in March.
Item public debt long-term in fiscal year 2021 reached 1.017 trillion yen ($7.836 billion), breaking the record for 18 consecutive years. The reason is due to the high cost of social security in the context of a rapidly aging population and emergency expenditures to deal with the COVID-19 pandemic, according to Kyodo News.
Together with an estimated 193 trillion yen ($1.488 billion) in long-term debt outstanding from local governments, Japan’s total public debt amounts to 1.210 trillion yen ($9.330 billion).
Outstanding long-term public debt, excluding some bonds, increased by 44 trillion yen ($3.338 billion) compared to 2021. The increase in debt makes the world’s third economy increasingly move away from the recovery process. financial health, which is already the worst among major economies.
Debt balances have doubled in the past 20 years, from 500,000 billion yen ($3.855 billion) at the end of 2002. Simply put, each Japanese person is saddled with a debt of 9.66 million yen ($74,500).
Raising interest rates on accumulated debt after the recent uptrend in bond yields will be a “headache” for the government. But so far, the Bank of Japan (BOJ) has bought large amounts of bonds as part of monetary policy to keep interest rates near zero.
In fiscal year 2022, the Japanese government plans to spend a record 107.60 trillion yen ($830 billion) on the initial budget. While tax revenue is expected to be around 65 trillion yen ($501 billion), the country could issue bonds to cover the budget deficit.
In addition, the ruling Liberal Democratic Party and its coalition partner the Justice Party have agreed to develop an additional budget for fiscal year 2022 worth more than 2.5 trillion yen ($19 billion) to deal with the problem. deal with the negative effects of conflict Ukraine. This could further deteriorate Tokyo’s financial health, worsening its public debt situation.
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