Fiscal sustainability in Japan

Shiro Armstrong, Tatsuyoshi Okimoto

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)


Japanese government debt is at unprecedented levels with a gross debt to gross domestic product ratio of over 230per cent and a net debt to gross domestic product ratio of 150per cent. There are three big challenges to fiscal sustainability: the huge amount of government bonds outstanding; continued budget deficits; and the growing age-related spending. The debt is sustainable as long as the market as a whole believes it is. The path to fiscal consolidation requires increasing the tax rate, reducing spending, broadening the tax base and growing the economy out of trouble. The longer the delay before moving to a more sustainable consolidation path, the larger the risks and closer Japan moves towards a financial crisis. The policy goal is to keep government debt sustainable, not to repay it all. Just as Japan has done since the burst of the asset bubble in the early 1990s, there is every likelihood that the Japanese economy will muddle through.

Original languageEnglish
Pages (from-to)235-243
Number of pages9
JournalAsia and the Pacific Policy Studies
Issue number2
Publication statusPublished - 2016 May
Externally publishedYes


  • Fiscal policy
  • Intergenerational
  • Japan
  • Japanese government bonds
  • Tax policy

ASJC Scopus subject areas

  • Sociology and Political Science
  • Public Administration
  • Economics, Econometrics and Finance (miscellaneous)
  • Political Science and International Relations
  • Strategy and Management


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