Post by Don on Jun 11, 2010 14:17:44 GMT
New prime minister Naoto Kan has warned that Japan could face a debt crisis like Greece if it does not deal urgently with its swelling national debt.
Mr Kan, speaking in his first address to parliament after taking office this week, said Japan, the world's second-largest economy, could not continue to rely on issuing bonds to pay off its debts as its coffers shrink amid an ageing and declining population.
Mr Kan, who previously served as finance minister, said his government needed drastic reform to achieve fiscal health, while proposing tax reforms and elimination of wasteful spending.
Japan has the largest public debt among industrialised nations, at 218.6 % of its gross domestic product in 2009, according to the International Monetary Fund.
Mr Kan said: "It is difficult to sustain a policy that relies too heavily on issuing debt. As we have seen with the financial confusion in the European community stemming from Greece, our finances could collapse if trust in national bonds is lost and growing national debt is left alone."
He promised his government would work closely with the Bank of Japan to avoid an increase in deflation and would focus on developing a "strong and comprehensive" policy.
Mr Kan, Japan's sixth prime minister in four years, has said he will also consider raising taxes, an issue he said previous governments had been too timid to face.
The social progressive and fiscal hawk said he would announce further details of his economic growth plan later this month, but said he aimed to have the economy grow by more than 2% annually by the 2020 financial year.
After amassing a vast public debt and overspending to the tune of 13.6 % of gross domestic product in 2009, Greece was saved from defaulting on its loans by the first instalment of a £89 billion rescue package from the IMF and the 15 other eurozone nations.
Mr Kan's predecessor, the unpopular Yukio Hatoyama, quit abruptly last week after he failed to keep a campaign promise to move the sprawling US Marine Corps Air Station Futenma off the southern island of Okinawa. His ratings had fallen below 20% on what was perceived as the weak leadership.
Mr Kan, speaking in his first address to parliament after taking office this week, said Japan, the world's second-largest economy, could not continue to rely on issuing bonds to pay off its debts as its coffers shrink amid an ageing and declining population.
Mr Kan, who previously served as finance minister, said his government needed drastic reform to achieve fiscal health, while proposing tax reforms and elimination of wasteful spending.
Japan has the largest public debt among industrialised nations, at 218.6 % of its gross domestic product in 2009, according to the International Monetary Fund.
Mr Kan said: "It is difficult to sustain a policy that relies too heavily on issuing debt. As we have seen with the financial confusion in the European community stemming from Greece, our finances could collapse if trust in national bonds is lost and growing national debt is left alone."
He promised his government would work closely with the Bank of Japan to avoid an increase in deflation and would focus on developing a "strong and comprehensive" policy.
Mr Kan, Japan's sixth prime minister in four years, has said he will also consider raising taxes, an issue he said previous governments had been too timid to face.
The social progressive and fiscal hawk said he would announce further details of his economic growth plan later this month, but said he aimed to have the economy grow by more than 2% annually by the 2020 financial year.
After amassing a vast public debt and overspending to the tune of 13.6 % of gross domestic product in 2009, Greece was saved from defaulting on its loans by the first instalment of a £89 billion rescue package from the IMF and the 15 other eurozone nations.
Mr Kan's predecessor, the unpopular Yukio Hatoyama, quit abruptly last week after he failed to keep a campaign promise to move the sprawling US Marine Corps Air Station Futenma off the southern island of Okinawa. His ratings had fallen below 20% on what was perceived as the weak leadership.
