whether to proceed with a planned tax hike.
HONG KONG (CNNMoney)
Talk about a lot of zeros.
Japan's finance ministry released data Friday
showing that the country's debt burden has
topped 1 quadrillion yen for the first time.
Yes, more than 1 quadrillion. If you want to
get specific, Japan's central government debt at
the end of June was 1,008,628,100,000,000
yen.
Here's another way to write that: 1,008.6
trillion yen. In U.S. dollars, it's $10.5 trillion.
While one quadrillion is largely a symbolic
level, the eye-popping number underscores a
real challenge for Japan, which has more debt
as a percentage of GDP than any other
developed nation.
Tokyo has now issued 830 trillion yen in
government bonds, and the country's revenue
collection has never kept pace. Japan's gross
public debt is projected to hit 230% of GDP by
2014 after years of sustained deficits.
Japan has increased borrowing this year to
spend more on the country's infrastructure as
part of an ambitious program of economic
stimulus aimed at ending decades of stagnation
and falling prices.
The Organization for Economic Cooperation
and Development has cautioned that Japan
must do more to arrest rising debt. "Stopping
and reversing the rise in the debt-to-GDP ratio
is crucial," the organization has said.
It's the same story at the IMF: "Japan needs
more ambitious plans to bring down debt, plus
structural reforms to shift the economy into
higher gear," IMF managing director Christine
Lagarde said earlier this year.
Related story: Even Abenomics can't ignore
Japan debt
Some help might be on the way , at least from
next year.
The government is planning to double
consumption tax to 10% by 2015. Paid by
consumers when they buy goods or services,
the tax will be increased in two stages, rising
first to 8% in April 2014.
Related story: Japan's tough choice on tax
hike
The country's leaders face a tough choice over
how, or even whether, to implement the
unpopular measure that could take a bite out
of growth just as a bold economic stimulus
plan appears to be bearing fruit.
Should the government follow through with
the tax hike, it would help raise revenue and
prove that Japan is committed to fiscal
reforms. But the measure, as planned, would
also slow the economy.
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