IMF Warns on Japan's Rising Debt |
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January 27, 2010
An International Monetary Fund working paper warned that the market's ability to absorb Japanese public bonds will likely diminish in years ahead as the country's population grows older, in a view that could add to market concern about whether Japan's massive debt is sustainable.
An International Monetary Fund working paper warned that the market's ability to absorb Japanese public bonds will likely diminish in years ahead as the country's population grows older, in a view that could add to market concern about whether Japan's massive debt is sustainable.
Large household savings and a stable domestic institutional investor base have helped keep Japanese government bond yields steady despite the rapid rise in public debt, said the paper by Kiichi Tokuoka, released Tuesday.
However, Japan's quickly aging population "will likely limit the market's absorptive capacity of public debt," and "shifts in institutional investors' behavior could serve to reduce inflows to the market," the paper said.
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