THE Japanese Minister of Economy, Trade and Industry Banri Kaieda used the last day of the World Economic Forum in Davos to claim that Standard & Poor’s downgrade of Japanese debt this week was “good timing”.
The minister said that the downgrade would help to spur public debate towards tackling the debt.
“Japan’s fiscal situation is very difficult and... the tax and national debt balance need to change. That will be a step forward,” he said during a panel discussion.
Japan’s government debt for 2010 is estimated at well over 200 per cent of its GDP. Its deficit is lower than some others’, at seven per cent, but there are concerns that the debt is simply too large to address in light of sluggish growth.
Earlier in the day, Japanese Prime Minister Naoto Kan – who took over in the job in June – had emphasised that Japan is eager to open up its economy further by signing free trade agreements.
“There is growing concern in Japan that in the midst of its economic stagnation the minds of its people, including the youth, are becoming inward-looking,” he said to delegates.
“This spirit of opening up the nation is now called for in Japan. With this belief, this year, I have set ‘the third opening of Japan’ as a grand objective. One specific policy is the promotion of economic partnerships,” he added, indicating that the government would promote the Doha free trade negotiations and the trans-Pacific partnership agreement.
The S&P downgrade threw the spotlight on Japanese public debt, embroiling the country in a global sovereign debt crisis that has so far focused mainly on the eurozone and the US deficit.