Japan's Debt A Short Briefing Blog

By time, we've seen several countries going default due to very high debts which ranges from Billions to Trillions of dollars. Like Sri Lanka, the most recent country to declare itself a default nation because they admitted that they're now unable to pay their debts of more than 50 billion USD. 

But we've seen these huge unbelievable figures of debts in some developed nations also like USA and China but their % is relatively low as compared to their GDPs. Meanwhile Japan holds 8,466.7 billion USD which is about 226% of Japanese GDP, in debt as per the Google last updated in Oct 2022. this huge debt has several reasons of its existence like;

*  The country first faced economical setback in 1990 which was followed by constant GDP downfall that lasted for a decade. 
*  Another economic collapse in 2008, and Tohoko/Fukushima disasters greatly impacted Japan's GDP which ultimately led to higher debts.
* Then Covid trauma equally affected Japanese financial situation like all the other countries and the debt graph didn’t come any lower.



In 2012, Japanese prime minister Yoshihiko Noda passed the bill to increase taxes by 10% in order to tackle the recession in the country, which hiked their tax collection by 8% till 2014 but that was still not sufficient enough for the increasing debt and falling GDP.  

In 2014, National Bank of Japan bought 70% of the Japan’s debt in the form of bonds and immediately threw dollars in the market to save the economy. These bonds are super-save to invest as they are sourced from the government itself like USA Treasury Securities. Investors have to pay the interest on bond till the maturity date which varies from 2 to 40 years.

These bonds have saved he government for the big time. That’s the only reason why even after heavy debt that is about 1.28 quadrillion in the local currency Yen, Japan is still one of the most the world and unlike Pakistan is not facing any wave of extreme inflation or default risk.

Note: Sources are present on internet




 



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