For the first time ever, Japan’s government debt exceeded a quadrillion yen in late June, hitting the record ¥1,008 trillion ($10.46 trillion), as Bloomberg informs. As compared to the previous month, the debt has grown by 1.7%.
The size of Japan’s indebtedness surpassed the GDP volume of Germany, France, and the UK all put together. Its ratio to Japan’s GDP is almost 2:1.
The budget shortfall in the country is expected to reach 10.3% of the GDP, whilst it used to be 9.9% in the past. Despite the large-scale program of leveling budget incomes and expenses, the budget gap is likely to come up to 2% of the GDP as a minimum, as the official government forecast states.
In January 2013, Japan’s Prime Minister Shinzo Abe announced the economic stimulus plan estimated at ¥10 trillion. The means are mainly being allocated on upgrading the infrastructure and supporting private investments. The program triggered further debt swelling.
In the nearest time, Japan is going to raise the sales tax from the current 5% to 8% with the view of the budget replenishment. The final decision is to be adopted after the statistics agency submits revised GDP data for the second quarter 2013 that is scheduled on September 9.
Japan has been going through the economic sluggishness for over 20 years. In late 2000, the state of affairs changed for the worse due to the global financial crisis. Meanwhile, government’s social expenditures in 2010 by contrast with 1990 surged from ¥47 trillion to ¥103 trillion.
It is also worth mentioning that the most part (90%) of Japan’s debt is expressed in terms of yen, it belongs to domestic investors. Japan possesses the second largest gold and forex reserves in the world that is higher than 1 trillion U.S. dollars.