Japan's public debt continues to swell ominously, yet there is no reassuring long-term scenario for deficit reduction. The government's latest medium-term outlook for economic and fiscal reform amounts to a tacit admission that the balanced budget is, at best, a distant goal.
The numbers boggle the mind. The government's debt load -- the amount of outstanding bonds -- already exceeds 400 trillion yen. And the total amount of long-term debt owed by the central and local governments is estimated to reach 720 trillion yen by the end of March 2005. That equals about 140 percent of the nation's total economic output.
All of this illustrates how difficult it is to cut deficits, particularly in a period of economic stagnation. In fact, borrowing has increased exponentially since the bubble burst in the early 1990s. As a result, the share of bond issuance in the national budget ballooned from 9.5 percent in 1991 to 44.6 percent in 2003.