Analysts feel the move could weigh on the government’s finances and even go so far as to earn a downgrade from its credit-rating agencies.“The credit-rating agencies have not reviewed Japan’s fiscal stability in a long time.The 2007–2009 global economic and financial crisis led to a sharp increase in public debt across various parts of the world, especially in advanced countries.This has heightened concerns about fiscal sustainability and their broader economic and financial market consequences.Economies in a period of expansion tend to see a decline in their debt as a proportion of their annual GDP.All the same, investors are showing increasing doubts over Japan’s ability to pay back its debts.
For much of the year, Abe’s poll ratings have sunk after he was slammed with several scandals. The central bank can accelerate its pace of bond-buying to push yields lower as part of its yield-curve control program, which keeps the 10-year JGB yield close to zero.
In particular, many believe that public debt has hit levels that are unsustainable and could lead to sovereign default risks.
The fact that the peripheral economies of Eurozone did indeed face the risk of sovereign debt defaults starting around late 2009 appeared to vindicate this sense of apprehension.
Abe said the government would divert the revenues from a planned consumption-tax hike on the fiscal package, instead of clearing its mountain of debt as initially planned.
Most of the spending will be funneled into child care and education.
As for the practice of transferring credit card balances, that joined the casualty list of the credit crunch.