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Government finances in Japan - statistics & facts

Japan has one of the largest economies as well as one of the highest national debts in the world. As of 2019, the national loan of Japan amounted to over 12 trillion U.S. dollars, around 235 percent in relation to the nation’s gross domestic product (GDP). Since the economic recession in the early 1990s, the Japanese government has established a national budget structure that is highly dependent on public bonds, Japanese Government Bonds (JGBs). JGBs have been constantly issued in the past decades to compensate for declining tax revenues. The public bond dependency ratio of the national budget decreased to around 40 percent in the 2010s following the moderate recovery of the economy. However, the corona disease (COVID-19) pandemic severely impacted the nation's economy and led to a spike in the dependency rate to a record high of 64 percent in fiscal 2020.

JGBs and national wealth

Despite the overwhelming amount of national debt, Japan has not yet experienced a sovereign debt crisis. This is mainly because the JGBs are issued in yen by the central bank, the Bank of Japan, and the debt is mostly held by domestic investors. Over 92 percent of the outstanding national bonds are owned by the Bank of Japan and national investors as of 2020. Therefore, Japan adjusts interest at comparatively low rates and runs less risk of defaulting in comparison to countries whose debts are primarily held by foreign investors.
Additionally, Japan holds a high amount of financial and non-financial assets. As of 2020, the net worth of Japan was nearly 3.7 quadrillion yen, representing a five-year consecutive increase. Japan also possesses the highest amount of net external assets, ranking first in the world for the last three decades. Thus, Japan holds a sufficient amount of national wealth to buffer a financial crisis. Nevertheless, with the decreasing and aging population along with the lingering effects of the COVID-19 pandemic, debt management will continue to be a major issue for the Japanese government and economy.

Government expenditures

Close to 30 percent of the total population in Japan are aged 65 years and older, making Japan one of the few super-aged populations in the world, according to the World Health Organization (WHO). The aging demographic impacted governmental expenditures and increased social security expenditures dramatically. In the 2021 budget, social security accounted for around 34 percent of the general account expenditures, a more than twofold increase compared to the 1990s. This trend is estimated to continue in the coming decades as health and long-term care-related public expenditures as well as pension distribution are expected to surge. To counter the rising national debt resulting from the swelling social security expenditures, the government raised the consumption tax from eight percent to 10 percent in 2019. As a result, the consumption tax became Japan’s largest revenue source besides JGBs to cover the nation's budget expenditure.

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Social security expenditures

Industries

Employment

Interesting statistics

In the following 7 chapters, you will quickly find the 38 most important statistics relating to "Government finances in Japan".

Government finances in Japan

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Government finances in Japan - statistics & facts

Japan has one of the largest economies as well as one of the highest national debts in the world. As of 2019, the national loan of Japan amounted to over 12 trillion U.S. dollars, around 235 percent in relation to the nation’s gross domestic product (GDP). Since the economic recession in the early 1990s, the Japanese government has established a national budget structure that is highly dependent on public bonds, Japanese Government Bonds (JGBs). JGBs have been constantly issued in the past decades to compensate for declining tax revenues. The public bond dependency ratio of the national budget decreased to around 40 percent in the 2010s following the moderate recovery of the economy. However, the corona disease (COVID-19) pandemic severely impacted the nation's economy and led to a spike in the dependency rate to a record high of 64 percent in fiscal 2020.

JGBs and national wealth

Despite the overwhelming amount of national debt, Japan has not yet experienced a sovereign debt crisis. This is mainly because the JGBs are issued in yen by the central bank, the Bank of Japan, and the debt is mostly held by domestic investors. Over 92 percent of the outstanding national bonds are owned by the Bank of Japan and national investors as of 2020. Therefore, Japan adjusts interest at comparatively low rates and runs less risk of defaulting in comparison to countries whose debts are primarily held by foreign investors.
Additionally, Japan holds a high amount of financial and non-financial assets. As of 2020, the net worth of Japan was nearly 3.7 quadrillion yen, representing a five-year consecutive increase. Japan also possesses the highest amount of net external assets, ranking first in the world for the last three decades. Thus, Japan holds a sufficient amount of national wealth to buffer a financial crisis. Nevertheless, with the decreasing and aging population along with the lingering effects of the COVID-19 pandemic, debt management will continue to be a major issue for the Japanese government and economy.

Government expenditures

Close to 30 percent of the total population in Japan are aged 65 years and older, making Japan one of the few super-aged populations in the world, according to the World Health Organization (WHO). The aging demographic impacted governmental expenditures and increased social security expenditures dramatically. In the 2021 budget, social security accounted for around 34 percent of the general account expenditures, a more than twofold increase compared to the 1990s. This trend is estimated to continue in the coming decades as health and long-term care-related public expenditures as well as pension distribution are expected to surge. To counter the rising national debt resulting from the swelling social security expenditures, the government raised the consumption tax from eight percent to 10 percent in 2019. As a result, the consumption tax became Japan’s largest revenue source besides JGBs to cover the nation's budget expenditure.

Interesting statistics

In the following 7 chapters, you will quickly find the 38 most important statistics relating to "Government finances in Japan".

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