Government Debt in Japan

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Presentation transcript:

Government Debt in Japan Group 1, Day 4 Aug. 2 2016

What is "Government Debt"? Government debt (also known as public debt, national debt and sovereign debt) is the debt owed by a central government. Government debt is one method of financing government operations, besides imposing tax and issuing currency.

Why is Government debt in japan is so great? External Debt in Japan increased to 364,958 JPY Billion in the first quarter of 2016 from 355,449 JPY Billion in the fourth quarter of 2015.

Government debt as percent of GDP Is used by investors to measure a country ability to make future payments on its debt, thus affecting the country borrowing costs and government bond yields. Japan recorded a Government Debt to GDP of 229.20 percent of the country's Gross Domestic Product in 2015.

How to deal with it? Taxes: Increase the consumption taxes. In Japan, the sales tax rate is a tax charged to consumers based on the purchase price of certain goods and services. The benchmark we use for the sales tax rate refers to the highest rate. Revenues from the Sales Tax Rate are an important source of income for the government of Japan.

How to deal with it? Bonds Deficit Bonds Construction Bonds Fiscal Investment and Loan Program (FILP) Bonds Refunding (or Rollover Bonds)

What’s happening now? December 2015: The Abe government was on track to stabilize the debt by 2020

What’s happening now? July 2016: Tokyo’s growth-revival plan is becoming similar to “helicopter money”

What will happen in the future? Japanese National debt from 2010 to 2020 (in billion U.S. dollar)