Will
the Japanese government be broke by October?
7
July, 2012
Jun
Azumi, the Japanese government’s Minister of Finance, has issued a
severe warning that because of the ongoing government standoff over a
bill meant to finance the country’s deficit, Japan could be
completely out of cash by the end of October. This dire situation
would be credited to various state spending like government employee
salaries, pensions, and benefits for unemployment. The financing bill
would fund almost half of the needed budget through the sale of
government bonds, but it has repeatedly been held in limbo as
opponents of the ruling Democratic Party of Japan (DPJ) have control
over the Upper House and threaten rejection.
Pleading
with the DPJ and its opposing Liberal Democratic Party (LDP) for
cooperation, Jun Azumi said it doesn’t matter which party has
control. If the bill is not passed, the Japanese government’s
spending will come to a stand still. As the world’s third-largest
economy, Japan is also considered to have the world’s highest
public debt, and if government spending stops, the country’s credit
ratings will drop even further.
This
deadlock revelation comes shortly after Prime Minister Yoshihiko Noda
earned cooperation from the LDP over a bill to double Japan’s 5%
sales tax by 2015. This has earned the bill passage through the Lower
House, and is now in consideration in the Upper House. However, this
bill’s passage has led to large exodus from the DPJ in protest,
which now threatens a loss of power for Noda and possible general
elections to be called. There is already skepticism worldwide about
Japanese politician’s ability to control their country’s
finances. A senior economics analysts from Mizuho Securities in Tokyo
says that this is the government is facing such uncertainty right
now, that it’s unbelievable opposing parties aren’t trying harder
to work together to prevent such an enormous collapse.
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