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News Release

The future of government bond issuance and public finance management in Japan

September 21, 2011

The issues at stake

●Although Japan’s government debt is large as compared with that of other countries, there seems to be little sense of crisis as regards the future management of public finances. One reason is that Japan has been able to issue government bonds with low interest rates for many years.
●Whether a country is able to maintain stability in the management of its public finances depends on its ability to procure funds smoothly and in a stable manner, by continuing to issue government bonds at regular intervals.
●In a country such as Japan which has a large outstanding balance of government bonds, depending on how high interest expenses rise in the future it is possible that the government’s ability to meet not only other discretionary expenses but also mandatory expenses may be affected, with a consequent impact on the stability of the management of public finances.
●To date, the Japanese government’s fund procurement appears to be “stable”, but could government bond issuance in fact have resulted in a change? Are there any concerns over procurement and absorption?
●What is the outlook for the Japan’s government bond interest expenses?
●To what extent is the stability of Japan’s management of public finances sustainable?

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