Recently, Japan broke records on government debt. The government is so over leveraged, owing over 1.053 quadrillion yen, which equates to over 8.78 trillion American dollars. This statement was released by Japan’s Finance Ministry at the end of March 2015
The Finance Ministry is currently headed by Tarō Asō, who was once the Prime Minister of Japan from Sep. 24, 2008 to Sep. 16, 2009. Although he was not re-elected, Asō also doubles as the Deputy Prime Minister. The incumbent Prime Minister of Japan is Shinzō Abe.
As high as the debt may seem now, it has already been unfortunately forecasted that it will most likely rise to a monumental 1.167 quadrillion yen, or 9.555 trillion American dollars by the end of their 2015 fiscal year, which is next March in 2016. Japan’s fiscal year, otherwise known as their financial year is always from Apr. 1 to Mar. 31 of the next year. The reasoning for this prediction is due to Japan’s rapidly aging population, as the number of elderly people grows, social security cost grow exponentially.
Before Asō, the previous financial administration had set a debt cap, or debt ceiling, of 44 trillion yen, which is about 513 billion dollars in U.S. money. When Asō became the financial minister, he instantly got rid of the limit, as a way to help Japan’s struggling economy at the times. Prime Minister Abe’s and Asō’s main financial goal when they began their tenure was to defeat deflation.
The reason for the debt exceeding 1 quadrillion yen is a combination of different
expensive debts. 881.5 trillion yen of the debt is due to Japanese government bonds; 55 trillion yen is from borrowing money, usually from financial institutions, and 116.9 trillion yen in financing bills.
As of Apr. 1, 2015, the Japanese population was said to be about 126.9 million people. Thus, if each person contributed equally to the debt, it would cost each person about 8.3 million yen, or about 69,000 U.S. dollars. This is the per capita debt for Japan.
Among all the majorly developed countries in the world, Japan has the worst fiscal health among them all. Japan’s Gross Domestic Product (GDP) is at 475.7 trillion yen or about 5.96 trillion American dollars, which is 3rd in the world. GDP is what economists use to gauge the health of country. America is currently number 1 with a GDP of 16.77 trillion dollars and China is 2nd with 9.24 trillion dollars. While it may sound like Japan is doing well as its GDP is 3rd in the world, 475 trillion yen barely puts a dent in a debt that is over 1 quadrillion yen and growing.
Japan is doing all it can to revive its economy and repair it. If it is unable to slow its increasing debt, it will be very difficult to say how Japan will fare in the future.