The national debt of Japan has exceeded ¥1,000trn yen for the first time, adding pressure for prime minister Shinzo Abe to proceed with his controversial sale tax plan.
Figures published by the Japanese finance ministry show the country’s outstanding public debt including borrowings rose to a record ¥1,008.6trn (£6.73trn) by the end of June.
This is up 1.7 percent from three months earlier and includes ¥830.5trn in government bonds.
Japan has the highest public debt to GDP ratio in the world and the new figures will strengthen the case for lifting the country’s sales tax from 5 per cent to 8 per cent in a bid to bolster the government’s finances.
However, the plan has been met with some criticism. It has argued that although this could result in short-term stimulus as consumers bring forward spending, it could also act as a constraint on growth over the longer-term.
Royal Bank of Scotland economist Long Hanhua Wang told Bloomberg: “Ballooning public debt underlines the need for Abe to push for a sales-tax increase. This is a minimum policy requirement for his government.”
A recent note by Capital Economics questioned whether the Bank of Japan will have to implement further monetary easing, after pointing out that a number of indicators suggest the recovery in the world’s third largest economy is already starting to slow.