Japan debt/GDP to worsen from FY2023 even with strong growth: sources

Japan debt/GDP to worsen from FY2023 even with strong growth: sources


Prime Minister Shinzo Abe's government is struggling to meet a promise to balance the budget - excluding debt-service payments and new bond sales - by the fiscal year ending in March 2021. Policymakers have instead emphasized that strong economic growth is at least shrinking the accumulated debt as a proportion of gross domestic product.

But a fiscal-reform panel of Abe's Liberal Democratic Party will present estimates on Thursday to a closed-door session that even on this optimistic basis, debt-to-GDP will start to rise after fiscal 2023/24, government and ruling coalition officials told Reuters on Wednesday.

Japan's gross public debt is about 240 percent of GDP by the broadest measure, the biggest in the world. Cabinet Office data, which compiles general accounts of the central and local governments, puts debt at 195.1 percent of GDP for the fiscal year that began Wednesday, falling to 182.6 percent in fiscal 2023/24.

That low now appears to be the bottom, the officials said. Even assuming growth remains robust, the new calculations assume that interest rates will eventually rise when the Bank of Japan starts to unwind its drastic monetary easing.

(Reporting by Takashi Umekawa; Writing by William Mallard; Editing by Chris Gallagher)