13
JAPAN’S PUBLIC FINANCES FROM THE VIEWPOINT
OF EUROPEAN FISCAL RULES
Pa la Bednářo á
Technical Uni e si y o Libe ec
Facul y o Economics
S uden ská 2, 461 17, Libe ec 1, Czech Republic
[email p o ec ed]
Abs ac
The balance o public budge s and public deb is he basic cha ac e is ics o he public
inances o an economy. In luenced by he economic c isis be ween 2008 and 2009, he
majo i y o de eloped coun ies s uggle wi h he isks connec ed wi h sus ainabili y o hei
public inances. The c i e ia o de ining iscal discipline in Eu ozone a e ep esen ed by
Maas ich con e gence c i e ia and by he exis ence and he unc ion o he S abili y and
G ow h Pac . The s a e o Japan’s public inances in compa ison wi h he s a e o public
inances o he Eu ozone coun ies shows wo se pa ame e s and wo se de elopmen al
endencies o bo h cha ac e is ics. In 2009 he de ici o public budge s was highe only in wo
Eu ozone coun ies and Japan’s public deb was almos wo imes highe han he highes
alue in he Eu ozone. Wi hou immedia e and e icien iscal consolida ion Japan’s public
inances will become one o he main h ea s o he u u e de elopmen o Japan’s economy.
In oduc ion
This a icle is a pa o he g an o he G an Agency o he Czech Republic “Economic
In eg a ion and Globaliza ion in Economics Theo y and Reali y”. The aim o his p ojec is o
map and also o compa e he de elopmen o economic heo ies om he hal o he 20 h
cen u y whe e he in luence o globaliza ion and in eg a i e p ocesses is e lec ed; o analyze
he ui ulness o he applica ion o hese heo ies o he solu ion o economic – poli ical
p oblems in he EU and in Japan; subsequen ly o de e mine he di ec ion o he u he
p og ess o hese heo ies as well as he in e ela ion be ween globaliza ion and in eg a ion.
The p ojec aims o e alua e he applicabili y o he conclusions o he indi idual economic
heo ies o economic policies o he Eu opean Union coun ies and Japan, hus o economic
con igu a ion o he EU in luenced by economic in eg a ion as opposed o Japan,which is
s anding ou side his phenomenon.
Today’s eco d public deb le els in mos ad anced economies a e no only a di ec
consequence o he global c isis. Public deb s had g own o e many decades be o e, because
hey had been used as he ul ima e shock abso be . They ose in bad imes bu did no decline
much in good imes. Go e nmen deb s ose conside ably o e he pas decades and his end
was gene ally accompanied by an expansion in he size o go e nmen s. Fo many indus ial
coun ies, he g ow h o gene al go e nmen expendi u e was eno mous in he 20 h cen u y.
As shown in Tanzi and Schuknech (1997), he a e age size o go e nmen deb o he g oup
o hi een indus ial coun ies (Aus alia, Aus ia, Canada, F ance, Ge many, I eland, Japan,
New Zealand, No way, Sweden, Swi ze land, Uni ed Kingdom and Uni ed S a es) inc eased
om 12% o GDP in 1913 o 43% o GDP in 1990. A he end o he pe iod, he a e age
public deb - o-GDP a io was 79% o big go e nmen s, 60% o medium sized go e nmen s
and 53% o small go e nmen s, whe e big go e nmen s a e de ined as hose wi h public
14
expendi u e- o-GDP a io highe han 50%; medium-sized go e nmen s: be ween 40-50% and
small go e nmen s: less han 40%. These his o ically high pe cen ages we e a consequence
“o wo Wo ld Wa s and an economic c isis necessi a ed he call o he s a e o be mo e
ac i e and cen alized. The ise o he public sec o also b ough g ow h in s a e
adminis a ion and p esen ed a con inuously g owing bu den o s a e budge s”.[8, pp.17] The
inancial and economic c isis ha has been in luencing he global economy since he summe
o 2007 is wi hou p eceden in pos -wa economic his o y. Al hough i s size and ex en a e
excep ional, he c isis has many ea u es in common wi h simila inancial-s ess d i en
ecession episodes in he pas . The 2008-2009 c isis has pu conside able s ains on public
inances, in pa icula on go e nmen deb s. Many coun ies a e a high isk wi h ega d o
iscal sus ainabili y. Looking ahead, ad anced economies will ace a o midable challenge o
educing deb a ios a he ime o g owing ageing- ela ed spending caused mainly by
p essu es om heal h ca e sys ems. Add essing hese iscal challenges will equi e g ow h-
iendly s uc u al e o ms, a iscal s a egy in ol ing g adual bu s eady iscal adjus men ,
s onge iscal ins i u ions, expendi u e and e enue e o ms, and an app op ia e deg ee o
bu den sha ing ac oss all s akeholde s. The balance o public budge s and public deb is he
basic cha ac e is ics o he public inances o an economy. Gene al go e nmen consolida ed
g oss deb is exp essed as a pe cen age o GDP. I e e s o he consolida ed s ock o g oss
deb a he end o a yea . Public balance is de ined as gene al go e nmen ne bo owing / ne
lending and is also exp essed in ela ion o GDP. The c i e ia o de ining iscal discipline in
Eu ozone a e ep esen ed by Maas ich con e gence c i e ia be o e a coun y en e s he
Eu ozone and by he exis ence and he unc ion o he S abili y and G ow h Pac o coun ies,
which pa icipa e in he EMU p ojec .
1 The Fiscal Maas ich C i e ia
The iscal Maas ich c i e ia a e de ined in [9]:
a) A icle 104c(1) o he Maas ich T ea y - Economic policy, as ”Membe S a es shall
a oid excessi e go e nmen De ici s“
b) A icle 1 o P o ocol on he excessi e de ici p ocedu e o he Maas ich T ea y
c) A icle l04c(2) o he Maas ich T ea y e e ed he e e ence alues:
 3% o he a io o he planned o ac ual go e nmen de ici o g oss domes ic p oduc a
ma ke p ices;
 60% o he a io o go e nmen deb o g oss domes ic p oduc a ma ke p ices;
C. Wyplosz (1991), among o he s, has made o mal dynamic analyses o es ablish c i e ia o
when a de ici is unsus ainable. The change in he public deb is equal o he public-sec o
de ici inclusi e o in e es on he exis ing deb so ha :
,/ iBA B  (1)
whe e:
B is he public-sec o deb ,
A is p ima y de ici and is equal o

,TG

G is go e nmen expendi u e,
T a e axes,
i is he nominal in e es a e.
Exp essing deb as a ac ion o Y, whe e Y equals GDP, han YBb /

.
Di e en ia ing b wi h espec o ime:
15



,//// 2bgiaY YB BY b  (2)
whe e:
a=A/Y,
g is he GDP g ow h a e.
Fo gi  he e is a s eady-s a e equilib ium; and he s eady-s a e deb a io, b*, when
0/  b , is:

./* igab  (3)
The Figu e 1 shows ha equilib ium is s able only i ig . The Figu es show only he cases
whe e he e is a posi i e deb a io. In equilib ium he e ec s o he public de ici , iba , a e
exac ly balanced by he e ec s o he ou pu g ow h, gb. These wo e ec s a e ep esen ed by
he lines ma ked iba and gb, he a indica ing he posi ion o he in e cep wi h he
o dina e. In Figu e 1(a), i gb exceeds iba

, ou pu g ow h e ec s exceed de ici e ec s so
b alls and app oaches *b ; and he con e se is ue whe e gbis less han iba . Howe e , in
Figu e 1(b) he iba line in e cep s he gb line om below and he equilib ium is uns able.
The uns able case is he mos ele an o economies which ha e a high le el o capi al pe
head and low a e o popula ion g ow h. The heo e ical c i e ion o a sus ainable de ici is,
howe e , di icul o use di ec ly as a no m o he iscal policy, bu because o he
ela i isa ion o economic pa ame e s (% o GDP, % o in e es a e) i is possible o use he
de ined c i e ia o he compa ison o iscal discipline o no only he Eu ozone coun ies bu
also in o he coun ies including Japan.
Figu e 1 S able and uns able equilib ium o he deb a io [5, pp.173]
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2 The S abili y and G ow h Pac
The S abili y and G ow h Pac (SGP) is a ule-based amewo k o he coo dina ion o
na ional iscal policies in he Eu opean Union (EU) and Eu opean Mone a y Union (EMU).
I is legally de ined in [9]:
 A icle 121 o he T ea y - he mul ila e al su eillance (basis o he s abili y and
con e gence p og ammes and he ea ly wa ning mechanism).
 A icle 126 o he T ea y - he Excessi e De ici P ocedu e (EDP).
 P o ocol (No 12) on he excessi e de ici p ocedu e annexed o he T ea y Council
Regula ion (EC) 479/2009 on he applica ion o he P o ocol on he EDP.
 Resolu ion o he Eu opean Council on he S abili y and G ow h Pac , Ams e dam, 17 June
1997.
The S abili y and G ow h Pac was es ablished o sa egua d sound public inances, which is
an impo an equi emen o EMU o unc ion p ope ly. The Pac consis s o a p e en i e and
a dissuasi e a m.
The p e en i e a m. Unde he p o isions o he p e en i e a m, Membe S a es mus
submi annual s abili y o con e gence p og ammes, showing how hey in end o achie e o
sa egua d sound iscal posi ions in he medium e m aking in o accoun he impending
budge a y impac o popula ion aging. The Commission assesses hese p og ammes and he
Council gi es i s Opinion on hem. The p e en i e a m includes wo policy ins umen s. The
Council, on he basis o a p oposal by he Commission, can add ess an ea ly wa ning o
p e en he occu ence o an excessi e de ici . Using he policy ad ice, he Commission can
di ec ly add ess policy ecommenda ions o a Membe S a e as ega ds he b oad implica ions
o i s iscal policies.
The dissuasi e a m. The dissuasi e pa o he Pac go e ns he excessi e de ici p ocedu e
(EDP). The EDP is igge ed by he de ici b eaching he 3% o GDP h eshold o he T ea y.
I i is decided ha he de ici is excessi e in he meaning o he T ea y, he Council issues
ecommenda ions o he Membe S a es conce ned o co ec he excessi e de ici and gi es a
ime ame o doing so. Non compliance wi h he ecommenda ions igge s u he s eps in
he p ocedu es, including o eu o a ea Membe S a es he possibili y o sanc ions. The
S abili y and G ow h Pac se s ou p ocedu es o be ollowed in he case o b each. In 2009,
G eece, La ia, Li huania, Mal a, Poland, Belgium, he Czech Republic, Ge many, I aly,
F ance, Spain, I eland, he Ne he lands, Aus ia, Po ugal, Slo enia and Slo akia we e placed
in he Excessi e De ici P ocedu e (EDP) by he Council, while Hunga y and he Uni ed
Kingdom had hei p io ecommenda ions amended. In 2010, he Council ga e no ice o
G eece o ake measu es o co ec i s excessi e de ici by 2012. On May 2010, ollowing a
eques by he G eek au ho i ies, he Eu og oup o mally launched a inancial assis ance
mechanism, condi ional on he implemen a ion o a p og amme o economic adjus men . The
adjus men p og amme was nego ia ed be ween G eece and he Commission, in liaison wi h
he ECB and he IMF. The equi emen s o Membe S a es placed unde he EDP we e se so
as o ake he pa icula needs and ci cums ances o he di e en coun ies in o accoun as
allowed by he SGP ules. The deadlines se o he co ec ion o he excessi e de ici s ha e
been se depending on he size o consolida ion ha is equi ed, aking wide issues o
sus ainabili y and budge a y isks in o accoun .
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3 Japan’s public inances
In he yea s ollowing Wo ld Wa II, go e nmen -indus y coope a ion, s ong wo k e hic,
highly de eloped echnology, and a compa a i ely small de ence alloca ion helped Japan
de elop a echnologically ad anced economy. Today, measu ed on a pu chasing powe pa i y
basis, Japan is he hi d-la ges economy in he wo ld a e he US and China. Measu ed by
o icial exchange a es, howe e , Japan becomes he second la ges economy in he wo ld
behind he US. Two no able cha ac e is ics o he pos -wa economy we e he close
in e locking s uc u es o manu ac u e s, supplie s, and dis ibu o s, known as kei e su, and
he gua an ee o li e ime employmen o a subs an ial po ion o he u ban labou o ce. Bo h
ea u es a e now e oding unde he dual p essu es o global compe i ion and domes ic
demog aphic change. Bo h he eal GDP g ow h and he in la ion a e a e assumed o
con e ge o 1 pe cen o e he long e m (as a esul , he nominal GDP g ow h is assumed o
be a ound 2 pe cen pe yea o e he nex 10 yea s). The nominal in e es a e g ow h
di e en ial was a ound 1¼ pe cen (p e-c isis a e age since 2000) o e he long un.
Consequen ly, nominal in e es a es a e assumed o ise o 3¼ pe cen (compa ed o 1.3
pe cen cu en ly) o e he long un, while he g ow h emains a i s 1 pe cen po en ial [7,
pp.33].
Figu e 2 shows he Budge balance and G oss deb o he Uni ed S a es, Japan, Eu o a ea and
he Uni ed Kingdom. Since 2000 all he economies ha e ex ensi ely used he possibili y o
de ici inancing a he ime o he economic g ow h and low in e es a es. Since 2008 he
ou pu o he economies has dec eased (pe cen age changes o he eal p oduc we e o
nega i e alues (-g) and a he same ime he in e es a es has inc eased (i). Bo h he ac o s,
p oduc and a e, has signi ican ly wo sen he s a e o he public inances in all he coun ies.
Japan’s deb a io has ballooned since he asse p ice bubble bu s in 1991 and he economy
has been plagued by de la ion and slow g ow h. Japan’s budge de ici me he c i e ion o
sus ainabili y (3% GDP) only in 2007. Du ing he whole obse ed pe iod, he size o Japan’s
budge de ici was highe han he a e age in he Eu ozone. The posi ion o Japan‘s g oss deb
is e en wo se. In he obse ed pe iod, he g oss deb g ew apidly up o a e y high alue o
almos 218% GDP in 2009. The absolu e size and speed o he g oss deb p og ession exceeds
se e al imes bo h he a e age o he Eu ozone and he e e ence alues o sus ainable public
inances (60% GDP).
Figu e 2 Budge balance (a) and G oss deb (b); (1996-2011, % o GDP) [4, pp. 207, 208]

18
4 The in luence o he 2008-2009 c isis on Japan’s public inances
The inancial c isis ha has been in luencing he global economy since he summe o 2007 is
wi hou p eceden in pos -wa economic his o y. Al hough i s size and ex en a e excep ional,
he c isis has many ea u es in common wi h simila inancial-s ess d i en ecession episodes
in he pas . The c isis was p eceded by a long pe iod o apid c edi g ow h, low isk
p emiums, abundan a ailabili y o liquidi y, s ong le e aging, soa ing asse p ices and he
de elopmen o bubbles in he eal es a e sec o . The ansmission o inancial dis ess o he
eal economy e ol ed a eco d speed, wi h c edi es ain and sagging con idence hi ing
business in es men and household demand, no ably o consume du ables and housing. The
c oss bo de ansmission was also ex emely apid, due o he igh connec ions wi hin he
inancial sys em i sel and also he s ongly in eg a ed supply chains in global p oduc
ma ke s. The 2008-2009 c isis has pu conside able s ains on public inances, in pa icula on
go e nmen deb . [10, pp.467] Many coun ies a e a high isk wi h ega d o iscal
sus ainabili y. Agains his backg ound, one impo an ques ion e e s o he economic
consequences o he egime o high and po en ially pe sis en public deb . While he economic
g ow h a e is likely o ha e a linea nega i e impac on he public deb - o-GDP a io, he high
le els o public deb a e also likely o be dele e ious o he g ow h.
Public inances in he las yea s ha e de e io a ed subs an ially due o he c isis. Pa o his
de e io a ion is cyclical, wi h he cyclically adjus ed p ima y balance weakening by abou 5
pe cen age poin s o GDP. The disc e iona y iscal s imulus only accoun s o 2 pe cen age
poin s o GDP. Mos o he emaining de e io a ion is due o he loss o po en ial GDP ha is
es ima ed o ha e been caused by he c isis. The 2008-2009 c isis has al eady pu conside able
s ains on deb and, in gene al, on public inances in he Eu ozone coun ies. The a e age
go e nmen de ici a io in he Eu ozone inc eased apidly om 1.3% o GDP in 2006 o
6.2% o GDP in 2009, while he g oss go e nmen deb a io su ged om 68.2% o 78.8% o
GDP du ing he same pe iod. The o e all Japan’s iscal de ici is es ima ed o ha e widened
o 11.4% o GDP in 2009 compa ed o 3.3% o GDP in 2006, e lec ing he lowe nominal
GDP, iscal s imulus, and he sha p d op in co po a e e enue. The g oss go e nmen deb
a io su ged om 191.3% o 217.7% o GDP du ing he same pe iod and i is one o he
highes among ad anced economies.
The highligh ed alues in he Table 1 ep esen he cases whe e he e e ence alues o
sus ainable public inances we e exceeded. The a e age budge de ici in EMU in 2009 was
6.2% o GDP and he a e age size o he g oss deb eached 78.8% o GDP. The a e age
alues, howe e , conceal signi ican di e ences be ween indi idual coun ies. In 2009 only
wo membe coun ies o EMU me he e e en ial alues o sus ainable public inances.
Japan’s public deb in 2009 eached eno mous 217.7% o GDP and was almos wo imes
highe han he highes alue in he Eu ozone. In 2009 only wo Eu ozone coun ies had hei
budge de ici highe han Japan’s de ici , which was 11.4% o GDP. Based on he
compa ison, i is possible o conclude ha he s a e o Japan’s public inances is he wo s
when compa ed wi h all he coun ies o he Eu ozone.
Unde he cu en and u u e p essu es on Japan‘s public inances, such as la ge p ima y gaps
and ising heal h ca e and pension spending, he public inances would spi al ou o con ol
unless iscal adjus men is pe o med. Decisi e ac ion is needed o e e se he nega i e
de elopmen o public inances wi hou hampe ing nea - e m g ow h p ospec s. Ma ke s ha e
ecen ly shown inc eased conce n o iscal ulne abili ies in ad anced coun ies. Such
conce ns unde mine con idence and h ea en he economic eco e y.
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Table 1 Budge balance and G oss deb o Eu ozones coun ies and Japan (2006-2009, %
o GDP) [4][7]
G oss deb (% o GDP) Budge balance (% o GDP)
2006 2007 2008 2009 2006 2007 2008 2009
BE 88,1 84.2 89,8 96,7 0,3 -0,2 -1,2
-6,0
DE 67,6 65.0 66,0 73,2 -1,6 0,2 0,0 -3,3
IE 24,9 25.0 43,9 64,0 3,0 0,1
-7,3 -14,3
GR 98,7 95,7 99,2 115,1 -3,6 -5,1 -7,7 -13,6
ES 39,6 36,2 39,7 53,2 2,0 1,9 -4,1 -11,2
FR 63,7 63,8 67,5 77,6 -2,3 -2,7 -3,3 -7,5
IT 106,5 103,5 106,1 115,8 -3,3 -1,5 -2,7 -5,3
CY 64,6 58,3 48,4 56,2 -1,2 3,4 0,9 -6,1
LU 6.5 6,7 13,7 14,5 1,4 3,6 2,9 -0,7
MT 63.7 61,9 63,7 69,1 -2,6 -2,2 -4,5 -3,8
NL 47.4 45,5 58,2 60,9 0,5 0,2 0,7
-5,3
AT 62.2
59,5 62,6 66,5 -1,5 -0,4 -0,4 -3,4
PT 64.7 63,6 66,3 76,8 -3,9 -2,6 -2,8 -9,4
SI 26.7 23,4 22,6 35,9 -1,3 0,0 -1,7 -5,5
SK 30.5 29,3 27,7 35,7 -3,5 -1,9 -2,3 -6,8
FI 39.7 35,2 34,2 44,0 4,0 5,2 4,2 -2,2
EMU 68,2 65,9 69,4 78,8 - 1,3 - 0,6 - 2,0 - 6,2
JPN 191.3 187,7 194,7 217,7 -3,3 -2,9 -5,4 -11,4
5 Fiscal consolida ion o Japan’s public inances
F om he economic policy pe spec i e, he nega i e impac o public deb on economic
g ow h s eng hens he a gumen s o ambi ious deb educ ion h ough iscal consolida ion.
Looking ahead, ad anced economies will ace he o midable challenge o educing deb
a ios a a ime when ageing- ela ed spending, in pa icula o en unde es ima ed p essu es
om heal h ca e sys ems, will pu addi ional p essu e on public inances. The cabine led by a
new P ime Minis e Nao o Kan endo sed a New G ow h S a egy on June 18, 2010 and a
Fiscal Managemen S a egy on June 22, 2010. The Japanese go e nmen passed a medium-
e m iscal amewo k ha co e s he ollowing h ee yea s, and de eloped a "Fiscal
Managemen S a egy" ha includes iscal de ici and deb a ge s gea ed owa d main aining
he medium- o long- e m iscal discipline. Add essing hese iscal challenges will equi e
g ow h- iendly s uc u al e o ms, a iscal s a egy in ol ing g adual bu s eady iscal
adjus men , s onge iscal ins i u ions, expendi u e and e enue e o ms, and an app op ia e
20
deg ee o bu den sha ing ac oss all s akeholde s. G adual iscal adjus men should con inue
o a decade. Based on IMF s a ’s es ima es, s abilizing he g oss deb - o-GDP a io a 240
pe cen o GDP in 2014 and hen placing i on a downwa d pa h would equi e a educ ion o
he s uc u al p ima y de ici by abou 1 pe cen pe yea o he nex 10 yea s, o a o al o 10
pe cen o GDP o e he nex decade. Gi en he limi ed scope o expendi u e educ ion,
iscal adjus men needs o ely on new e enue sou ces as well as measu es o con ol he
g ow h o spending. Acco ding o he cu en IMF’s p ojec ions, he assumed economic
g ow h will also help s abilize he public deb . The iscal adjus men could be achie ed in a
numbe o ways cen ed a ound an inc ease in he consump ion ax a e. The key elemen s o
a c edible package o Fiscal Adjus men could include [7, pp.10]:
 Exi om s imulus. Fiscal s imulus in Japan is sizeable, es ima ed a a ound 2½ pe cen o
GDP in bo h 2009 and 2010. Measu es ha e ocused on employmen suppo and subsidies
o ene gy e icien p oduc s. S a ing in June 2010, he go e nmen will also p o ide child
allowances, which, i ully implemen ed, would amoun o ¾ pe cen o GDP annually
(excluding exis ing allowances). Gi en he imp o ed economic ou look, he go e nmen
should allow s imulus measu es o expi e in iscal yea 2010, which would con ibu e
sa ings o abou 1–1.5 pe cen o GDP.
 Comp ehensi e ax e o m. Japan’s o e all ax e enue is small by in e na ional
s anda ds a 18 pe cen o GDP in 2007, pa ly due o he low consump ion ax a e a 5
pe cen . In addi ion, he pe sonal income ax sys em ea u es la ge deduc ions ha se e o
educe a e age ax a es. By con as , he co po a e ax a e (40 pe cen ) is compa a i ely
high. A g adual inc ease o he consump ion ax o 15 pe cen o mo e should begin wi h a
modes inc ease in iscal yea 2011. Dis ibu ed o e se e al yea s, he consump ion ax
hike could gene a e 4–5 pe cen o GDP o e enue. This measu e could be combined wi h
a educ ion o pe sonal income ax allowances and a co po a e ax e o m o s imula e
domes ic in es men .
 Limi ing expendi u e g ow h. The scope o u he spending cu s is limi ed. Gene al
go e nmen expendi u e including social secu i y was 33 pe cen o GDP in 2007, he
lowes among G-7 economies. Since he ea ly 2000s non-social secu i y expendi u es ha e
been la , bu social secu i y ela ed spending has isen and will con inue o do so wi h an
aging popula ion. By con aining public spending g ow h and e o ming pension
en i lemen s in line wi h ising li e expec ancy, sizeable addi ional sa ings would be
gene a ed o e he nex decade (3–4 pe cen o GDP). Measu es could include eezing non
social secu i y spending in nominal e ms; limi ing as - ising heal h-ca e cos s and o he
social en i lemen s; in oducing an income cap on social ans e s; and aising he s a u o y
e i emen age (cu en ly a 65 yea s).
Conclusion
Japan’s economy con inues o imp o e, which is acili a ed by obus expo s and policy
s imulus. Following he deep ecession in 2009, he g ow h accele a ed o 5 pe cen
(seasonally adjus ed annual a e) in he i s qua e o 2010 due o expo exceeding. S ong
demand om Asia, especially o capi al goods, has suppo ed expo s, while subsidies aimed
a consume du ables ha e inc eased household spending. Wi h he sha p all in demand las
yea , de la ion has e-eme ged wi h co e in la ion a e aging a ound -1 pe cen since la e 2009.
The cu en accoun su plus sh ank u he o 2.8 pe cen o GDP in 2009, as a esul o lowe
global in e es a es and a s onge yen. The ade su plus emained unchanged a a ound 1
pe cen o GDP, while he income balance de e io a ed in line wi h lowe global in e es a es.
21
The ecen p oblem in Eu ope has aised he unce ain y and downside isks a ound he
ou look and sha pened he ocus on Japan’s high public deb a io, which is one o he highes
among ad anced economies. The s a e o Japan’s public inances in compa ison wi h he s a e
o public inances in he Eu ozone coun ies shows wo se pa ame e s and wo se
de elopmen al endencies o bo h cha ac e is ics. Japan’s public deb in 2009 eached
eno mous 217.7% o GDP and i was almos wo imes highe han he highes alue in he
Eu ozone. In 2009 only wo Eu ozone coun ies had hei budge de ici s highe han Japan’s
de ici , which was 11.4% o GDP. Based on he compa ison, i is possible o conclude ha he
s a e o Japan’s public inance is he wo s when compa ed wi h all he coun ies o he
Eu ozone. Eu opean iscal c i e ia, ega dless o all he ese a ions o hei pa icula o m
and en o cemen o hei pe o mance, ha e helped o p e en public inances o Eu opean
coun ies om ge ing o such a c i ical condi ion as i is he case o Japan’s public inances.
The cabine led by he new P ime Minis e Nao o Kan endo sed a New G ow h S a egy on
June 18, 2010 and a Fiscal Managemen S a egy on June 22, 2010. Add essing hese iscal
challenges will equi e g ow h- iendly s uc u al e o ms, a iscal s a egy in ol ing g adual
bu s eady iscal adjus men , s onge iscal ins i u ions, expendi u e and e enue e o ms, and
an app op ia e deg ee o bu den sha ing ac oss all s akeholde s. Wi hou immedia e and
e icien iscal consolida ion Japan’s public inances will become one o he main h ea s o
he u u e de elopmen o Japan’s economy.
This pape was c ea ed wi h he suppo o he G an Agency o he Czech Republic; g an
N .402/09/0592; “Economic In eg a ion and Globaliza ion in Economics Theo y and
Reali y”