Japan PM Ishiba Sounds Alarm Over Country’s Financial Situation, Compares Fiscal Health With Greece

Japan PM Ishiba Sounds Alarm Over Country’s Financial Situation, Compares Fiscal Health With Greece

[Music] Japan’s Prime Minister Shagaru Ishiba has sparked headlines by bluntly stating Japan’s fiscal health is worse than Gree’s. According to a Bloomberg report, speaking in parliament on Monday, Ishiba pushed back against growing political pressure to cut taxes ahead of the crucial upper house elections in July. Opposition parties have been calling for reductions, particularly to the consumption tax to ease the cost of living burden on citizens. But made it clear now is not the time. He rejected the idea of financing tax cuts through government bonds, calling the nation’s fiscal situation extremely precarious. In fact, he said Japan is in worse shape than Greece, the very country whose sovereign debt crisis once threatened the Euro zone. At the heart of the issue is Japan’s rising borrowing cost. The Bank of Japan has been steadily raising interest rates since it ended its negative interest rate policy last year. A response to resurgent inflation and rising wages not seen in decades. But higher rates come with a price. They increase the cost of servicing Japan’s already massive debt. Japan’s general government debt stands at 234.9% of GDP, far higher than Greece’s 142.2% 2% according to the International Monetary Fund. For context, Japan is set to spend nearly a quarter of its initial annual budget this fiscal year just on debt related payments. Despite this staggering figure, Japan has so far avoided a Greekstyle crisis. The key difference is that most of Japan’s debt is held domestically and the country remains a major creditor globally, backed by strong foreign asset holdings. Still, Ishiba’s comments reflect a deeper worry. He acknowledged that social service costs continue to climb even as tax revenues increase. But slashing taxes now, he argued, and covering the shortfall with new debt would be fiscally irresponsible. His message was clear. In a world where interest rates are no longer zero, Japan must tread carefully. Economic populism in the form of tax cuts may be tempting ahead of an election, but the long-term risks, warned, are far too great. This statement may not win votes, but it’s a rare moment of fiscal honesty in a high stakes political season. For more news and updates, keep watching Live Mint. [Applause] [Music] [Music]

Japan’s PM Ishiba Sounds Alarm Over Country’s Financial Situation, Compares Fiscal Health With Greece

Japanese Prime Minister Shigeru Ishiba said his country’s financial condition was worse than Greece’s as he rejected calls for tax cuts at a time of rising borrowing costs.

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