by Enda Curran and James Mayger
The Washington Post with Bloomberg
(Bloomberg) — Japan for years has been renowned for having the world’s largest government debt load. No longer.
That’s if you consider how the effective public borrowing burden is plunging — by one estimate as much as the equivalent of 15 percentage points of gross domestic product a year, putting it on track toward a more manageable level.
Accounting for the Bank of Japan’s unprecedented government bond buying from private investors, which some economists call “monetization” of the debt, alters the picture. Though the bond liabilities remain on the government’s balance sheet, because they aren’t held by the private sector any more they’re effectively irrelevant, according to a number of analysts looking at the shift.
“Japan is the country where public debt in private hands is falling the fastest anywhere,” said Martin Schulz, a senior economist at Fujitsu Research Institute in Tokyo.