Japan Fiscal Outlook 2014: To Owe is Human

July 23, 2014

Zachary Fillingham

Bank of Japan Governor Haruhiko Kuroda cc Sebastian Derungs


Japan’s public debt is expected to reach the eye-popping level of 240% of GDP in 2014, solidifying its undisputed position as the most indebted country in the industrialized world. In 2012, of the $437 billion the Japanese government made in tax revenues, it spent a record $257 billion servicing its debt. By the time an approx. $300 billion (2014 figure) in social security spending is taken into consideration, the government has spent all of its money before the sun even rises on the first day of its fiscal year.

That Japan is sitting on a potentially explosive debt crisis is obvious to all; far less so is the matter of how long Tokyo can continue to ignore the problem.


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Tags: Abenomics
  • wulfenstraat

    Yes, but most of this debt is owed to Japanese citizens. It’s not as if wealth is leaving Japan’s shores. It’s just moving from one pocket to another. It just redistributes the wealth, unfortunately making the wealthy wealthier.

    The trick is for these Japanese citizens to be taxed at a higher rate than citizens who earn less. In short, Japan’s public debt can be fixed by a progressive tax rate. So, let’s not belabor the point. Japan is freaking rich, and it doesn’t have a real debt problem.

  • sinclair

    The debt is huge. The Japanese people have saved trillions of dollars and the government has borrowed and wasted huge chunk and the money is gone. Total bank deposits in Japan are more than double the United States and one third of them have been loaned to the government. The largest financial institution in the world is Japan Post Holdings, which is the post office. About half is insurance and the rest is deposits (Total $3.8 trillion) and over 60% has been loaned to the government. For perspective, the United States has $10 Trillion of total bank deposits (banks, S&L’s, credit unions,etc). Japanese insurance companies are also important and much of their assets are in Japanese Government Bonds. GPIF is the largest retirement fund in the world at about $1.3 trillion and some 60% has been loaned to the government. Either the currency gets crushed or it becomes impossible to issue enough new debt but either way; the Japanese people are going to lose most of their wealth.


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