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2010-06-11 07:02:13
Japan is at "risk of collapse" under its huge debt mountain, the country's new
prime minister has said.
Naoto Kan, in his first major speech since taking over, said Japan needed a
financial restructuring to avert a Greece-style crisis.
"Our country's outstanding public debt is huge... our public finances have
become the worst of any developed country," he said.
After years of borrowing, Japan's debt is twice its gross domestic product.
"It is difficult to continue our fiscal policies by heavily relying on the
issuance of government bonds," said Mr Kan, Japan's former finance minister.
"Like the confusion in the eurozone triggered by Greece, there is a risk of
collapse if we leave the increase of the public debt untouched and then lose
the trust of the bond markets," he said.
Tax reform
Mr Kan did not detail the fiscal changes he may impose to revive Japan's
economy after years to stagnation.
But in the past he has advocated increasing Japan's sales tax, a move that
would be unpopular.
He said: "It is unavoidable to launch a full reform of the tax system. If we
maintain the current level of issuance of new bonds, outstanding debt will
surpass 200% of GDP in a few years.
"It's been 20 years since the collapse of the bubble economy in the early
1990s. Because the Japanese economy had been in the doldrums, people have lost
the trust they had and fear the uncertainty of the future," he said.