Paying off debts is something that is widely spread nowadays throughout the world. Many countries now face the issue of national debts in which they have to repay a peculiar amount of money to other countries. Japan is the world’s second largest developed country. However, that does not alter the fact that they have a tremendous national debt to pay off. Japans government has been a net borrower since 1993. Government debt to GDP in Japan averaged 123.60% from 1980 until 2015, reaching an all time high of 229.20% in 2015. Now, the question that’s on everyone’s mind; is Japan the next hotspot on the financial wall of worry?

 

It has been rumored that if Japan does not start taking steps towards decreasing their debts, they will be facing a debt that could possibly be three times the size of its economy by 2030. The IMF (International Monetary Funds) has been persistently urging Japan to start controlling its spiral debts. The IMF stated that the world’s second largest economy needs to strike a balance between growth and debt reduction.

 

 

In 2015, Tokyo’s Prime minister, Shinzo Abe, was expected to reveal a plan that would balance out Japan’s Debt within five years, due to the fact that Japan’s debt are now more than twice the size of the nation’s economy. Billionaire bond investor Bill Gross, one of the best known and longest serving bond manager, stated the following. “At some point Japan will basically buy up all its debt and the central bank will forgive the treaty and try to move forward with that, I see no other way for Japan.”

 

 

Lets take a walk down memory lane and recall one of the main reasons why Japan is still in debt. Since the bubble burst that occurred in the early 1990’s, Japan suffered from a slow and negative growth. The 1990’s was known as the lost decade for Japan.

 

Despite having one of the strongest economies, Japan’s fiscal health is getting worst among the major developed economies. It has been said that the government releases a fiscal data every three months, which is compiled according to international monetary fund standards.