Japan, the single largest foreign financier of the U.S. federal government, faces its own mountain of debt just as its economy is beginning to shrink.
Prime Minister Shigeru Ishiba, elected last year as a fiscal hawk, has been facing calls for fresh stimulus ahead of an election for the upper house of parliament in July. On Monday, he warned MPs that Japan could not afford any tax cuts paid for with more borrowing.
“Our country’s fiscal situation is undoubtedly extremely poor,” he said, “worse than Greece’s.”
Outstanding debt already exceeds the size of its gross domestic product by nearly 2.5 times. The lower the denominator—in this case the economy—the greater the ratio and the less sustainable a nation’s debt burden becomes, experts say.
