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Japan faces serious debt problem

06-29-2010 08:55 BJT

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Of the G20 nations, Japan faces the toughest task, to halve it's national debt to GDP ratio. The country's debt currently stands at twice its GDP.

Japan's facing the most serious national debt problem among developed countries.

It's estimated that the total amount of Japan's debt will be over 860 trillion yen this year, hitting a record high.

Japan's debt is more than twice its GDP, exceeding Greece which is also a debt-plagued country and fast becoming the highest of all developed economies.

Kelong, Senior Researcher of Fujitsu Research Institute said "Japan's debt is more than twice its GDP. There are two varying opinions on whether Japan should continue to issue bonds. Some people think issuing more bonds could cause serious consequences or even economic crisis, but others think that the country needs to be supported by issuing bonds, otherwise, there would be greater economic crisis. "

Japanese banks, insurance companies and securities are holding 90 percent of the treasury bonds. The capital mainly comes from the savings of ordinary families. Under this structure, there could be a domino effect without the cushion of foreign capital if the bubble bursts... and that would be a blow to Japan's economy.

Oki Matsumoto, CEO of Monex Group said "The capital supply is insufficient. When the country launches construction of public infrastructure, the banks and insurance companies purchase a lot of treasury bonds. "

Japan is talking about raising its consumption tax, in a bid to rein in it's worsening debt problem.

Editor:Xiong Qu |Source:

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