About two months ago, on September 5, we noted that the famous American "fiscal cliff" is not the only "budgetary cliff" into which the economy risks falling. There is also a Japanese version. Where do we stand with efforts to avoid that particular chasm?
Lawmakers in Tokyo have taken some steps forward. The problem lay in the Diet's delay in approving the budget, which would have led to a complete shutdown of public services in Japan, making it impossible to finance them. The opposition had blocked the approval and wanted in exchange for a date for the elections. But, at least in the lower house, an agreement was reached yesterday, and the government will be able to issue bonds to finance 40% of the budget. Otherwise, for the first time since the end of the war, Tokyo would have had to send civil servants home.
Prime Minister Noda has been under pressure since he doubled the consumption tax to reduce the deficit which remains at high levels. The Monetary Fund estimates a public debt of 245% of GDP for next year, a record for industrial countries. Although it must be said that a large part of this debt is held within the public sphere (by the Bank of Japan, the social security system and other public or para-public agencies), such that the net public debt is 145% of GDP.
Japan Today
