Japan PM: 'Risk of Collapse' from Debt Mountain

Japan's new Prime Minister Naoto Kan on Friday pledged a fiscal policy overhaul to reduce the country's massive public debt mountain, warning of a Greece-style meltdown.Skip related content

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After decades of stimulus spending and feeble tax receipts, Japan's public debt is …MoreEnlarge photo

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• Japan's new prime minister Naoto Kan has pledged a fiscal policy overhaul to reduce…MoreEnlarge photo

"Our country's outstanding public debt is huge," the centre-left leader said in his first policy address since taking office Tuesday. "Our public finances have become the worst of any developed country."

After decades of stimulus spending and feeble tax receipts, Japan's public debt is now nearly double its gross domestic product, forcing the government to issue ever more bonds to pay for hefty outlays.

"It is difficult to continue our fiscal policies by heavily relying on the issuance of government bonds," said Kan, the former finance minister.

"Like the confusion in the eurozone triggered by Greece, there is a risk of collapse if we leave the increase of the public debt untouched and then lose the trust of the bond markets."

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