The government’s liabilities exceeded its assets by as much as 776.5 trillion yen at the end of March 1999, according to the country’s first-ever national balance sheet released Tuesday by the Finance Ministry.

The national balance sheet records the assets and liabilities held by the central government. Assets and liabilities held by local governments and special government corporations are not included.

The balance sheet consolidates the central government’s general account budget with 38 special accounts.

The size of future pension obligations was calculated under three different methods. As a result, liabilities in excess of assets add up to 132.5 trillion yen, 269.8 trillion yen or 776.5 trillion yen, depending on the pension figure.

The most pessimistic figure was reached by treating all pension benefits promised by the government, worth 1.43 quadrillion yen, as liabilities.

The smallest figure determines only the public pension system’s reserves as liabilities, while the middle figure assumes as liabilities the reserves plus the portion of the benefits to be paid by the central government.

As for assets, the balance sheet shows that the nation’s assets stood at about 658.7 trillion yen as of the end of March 1999.

The balance sheet shows roads, bridges and other fixed assets at acquisition cost, with depreciation considered. Other assets, such as cash, marketable securities and loans, are presented at current market value.

The liability section pegs government bonds held by the private sector and postal savings as liabilities. The latter is a key source of funding for the government’s fiscal investment and loan program, known as “zaito.”

Finance Minister Kiichi Miyazawa told a recent news conference that although the balance sheet is designed to illustrate Japan’s fiscal situation, it could be misleading to make a simple comparison with negative net worth at a company.

“We recognize the difficulties in drawing up a national balance sheet that is similar to that of a business,” Miyazawa said, citing as an example the difficulty in determining the worth of such government-owned assets as rivers.

“The significance of this experiment is to show the public the government’s efforts to respond to their call (for more clarity in the nation’s treasury),” he said. “We are open to any criticism or suggestions.”

Vice Finance Minister Toshiro Muto said it would be wrong to judge the state of the nation’s finances simply on the basis of the balance sheet.

“The nation’s balance sheet is different in nature from that of private companies,” Muto said last week, emphasizing that the government’s fiscal management is not profit-oriented.

Ministry officials also noted that the government is obliged to provide public services even if they are loss-making.

A similar balance sheet for the United States showed its liabilities exceeded its assets by about $6 trillion (about 654 trillion yen) as of the end of September 1999, but that does not include pension obligations.

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