Japan Issues ¥16.8 Trillion New Bonds to Soften Economic Blow from COVID-19Economy Politics
The government has approved an enormous ¥108.2 trillion stimulus package to cushion the economic blow from the global COVID-19 pandemic. In order to secure the funds needed for the package, ¥16.8 trillion new Japanese government bonds will be issued under the FY2020 JGB Issuance Plan.
This brings the total new JGB issuance in fiscal 2020 to ¥49.4 trillion, rivaling the ¥52.0 trillion JGBs issued in response to the 2008 financial crisis. The addition lifts the ratio of JGB issuance to general account revenue, known as the “bond dependency ratio,” from 31.7% at the time of the initial budget to 41.3%. The ratio is likely to increase further if additional bonds are issued or tax revenue is revised downward.
Confronted with an unprecedented crisis arising from the huge drop in economic activity, reviving the economy will be the top priority once the spread of the virus has subsided. But unless Japan squarely faces its worsening fiscal situation, the debt placed on the shoulders of future generations will continue to swell.
(Translated from Japanese. Banner photo: © Pixta.)