HONG KONG — Naoto Kan, Japan's new prime minister, pledged to make the country's sickly economy his first priority and to pull Japan from its "quagmire of an ever- bulging debt." But that is easier said than done. It is not merely a question of when to stop the government stimulus and where to put the knife to spending. Japan needs a radical overhaul, which will have to include sweeping changes in the country's socioeconomic structures.
Japan's government debt-to-GDP ratio is about twice that of Greece — 218.6 percent at the end of 2009 (IMF figures) against 113 percent for Greece. Japan's government debt is ¥6.93 million per Japanese, while Greece owes ¥3 million per Greek, even including local bonds.
Whereas Athens has been forced to take savage cuts to tackle its deficit, the political debate in Japan is how many extra government bonds to issue in the current year. As finance minister, Kan wanted to keep the bond issuance for the fiscal year 2011 that begins in April next year below the unprecedented ¥44.3 trillion issued this year. But some ministers, notably Shizuka Kamei, the leader of the People's New Party, a vital partner in the ruling coalition, want public spending to be maintained to continue boosting the economy.