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Japan to sell record new debt exceeding $960 billion as pandemic hits tax revenues - Nikkei - Metro US

Japan to sell record new debt exceeding $960 billion as pandemic hits tax revenues – Nikkei

Business buildings are pictured in Tokyo

TOKYO (Reuters) – Japan is likely to sell a record amount of new government bonds exceeding $960 billion in the current fiscal year due to plunging tax revenues, the Nikkei newspaper said on Wednesday, underscoring the heavy toll the coronavirus pandemic took on the economy.

The huge debt will add strains to Japan’s already tattered finances and could constrain its ability to keep battling the lingering pain from COVID-19 on a fragile economic recovery.

Japan announced a fresh economic stimulus package on Tuesday to speed up the recovery from a deep economic slump, bringing the combined value of coronavirus-related stimulus to about $3 trillion – roughly two-third the size of Japan’s economy.

The additional cost from the new package will likely boost new debt issuance for the year ending in March 2021 to over 100 trillion yen ($960 billion) from the current plan of 90.2 trillion yen, the Nikkei reported on Wednesday.

Tax revenues during the year will likely fall 8 trillion yen short of initial estimates to around 55 trillion yen, as the pandemic hit corporate profits, the paper said without citing sources.

That would be the biggest shortfall since fiscal 2009, when the collapse of Lehman Brothers triggered a global financial crisis.

The world’s third-largest economy rebounded in July-September from its worst postwar contraction in the second quarter, though many analysts expect a third wave of COVID-19 infections to keep any recovery modest.

Japan’s public debt, at twice the size of its economy, is the biggest among advanced nations due to years of heavy stimulus spending and ballooning social welfare costs of a rapidly ageing population.

($1 = 104.1600 yen)

(Reporting by Leika Kihara; Editing by Chris Reese and Sandra Maler)

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