Japan is the country in the world with the highest government debt to GDP ratio. There is a lot of talk lately about Japan going under because of it’s enormous debtload and the inflation-generating policies of Prime Minister Abe. So I decided to check the numbers out from the Japanese Ministry of Finance.
Report found here [PDF]
Japan’s total debt will be at 750 trillion yen at the end of 2013.
Japan will be for 46% (42 trillion yen) dependable on the issue of new government bonds for its budget this year. Half of the money raised with the issue of new bonds (22 trillion yen) will go to the national debt service. The national debt service includes the repayment of previous government bonds and the interest on those bonds.
Japan projects to pay 10 trillion yen in interest this year on their outstanding bonds. That is roughly 11% of the total Japanese government budget.
These are some pretty interesting statistics in my opinion. Because the Japanese government has to pay a very low interest rate on their bonds it all works out at the moment. One can only imagine what will happen when these rates will go up. Taxes will probably have to go up in the future to pay for all this debt.
Japan will certainly be a market to follow in the future!