Japan public debt

The Japanese public debt exceeded one quadrillion yen (US$10.46 trillion) in 2013, more than twice the annual gross domestic product of Japan.

In August 2011, Moody's rating cut Japan's long-term sovereign debt rating by one notch to Aa3 from Aa2 in line with the size of the country's deficit and borrowing level. The large budget deficits and government debt since the 2008-09 global recession and followed by earthquake and tsunami in March 2011 contributed to the ratings downgrade. In 2012 the Organization for Economic Cooperation and Development (OECD) Yearbook editorial (Gurría 2012) stated that Japan's debt "rose above 200% of GDP partly as a consequence of the tragic earthquake and the related reconstruction efforts. Former Prime Minister Naoto Kan called the situation "urgent". Japan had the world's highest debt per GDP in 2014.

In order to address the Japanese budget gap and growing national debt, in June 2012 the Japanese National Diet, at the urging of Prime Minister Yoshihiko Noda of the Democratic Party of Japan, passed a bill to double the national consumption tax to 10%. The new bill increased the tax to 8% in April 2014. Although it was originally scheduled to raise the tax to 10% in October 2015, this has been subsequently delayed until at least October 2019. The goal of this increase was to halt the growth of the public debt by 2015, although reducing the debt would require further measures. The DPJ subsequently lost control of the Diet in late 2012, and Noda's successor Shinzo Abe, of the Liberal Democratic Party, implemented the "Abenomics" program, which involved an additional 10.3 trillion yen of economic stimulus spending to balance out the negative impact of the consumption tax increase on economic growth.

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