TOKYO : Japan's ticking debt time bomb will likely complicate the next central bank governor's task of steering a smooth exit from ultra-loose monetary settings, with rising long-term interest rates already forcing policymakers to amend budget projections.Prime Minister Fumio Kishida's administration has
TOKYO : Japan's ticking debt time bomb will likely complicate the next central bank governor's task of steering a smooth exit from ultra-loose monetary settings, with rising long-term interest rates already forcing policymakers to amend budget projections.
As a result, Japan spent 22 per cent of its annual budget on debt redemption and interest payment last year, more than 15 per cent on public works, education and defense combined. Markets see Ueda as somewhat hawkish on monetary policy, drawing on his remarks in recent years offering a critical view of Kuroda's radical stimulus programme.
"Even a 1-2 per centage point is very big in Japan's context. I'm not sure how well the service sector could absorb this increase," Kim Eng Tan, senior director of S&P's sovereign ratings team in Asia-Pacific, told Reuters.Even before the BOJ takes any action towards an exit, rising bond yields are starting to affect the government's finances.
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