Issuance of Japanese government bonds (JGBs) is likely to shrink for the next two years as the Japanese national debt is reduced. Or so reports the Nikkei newspaper in Tokyo, noting that the national debt was falling for the first time since the Ministry of Finance started publishing statistics in 1996. The newspaper also points out that the new Prime Minister, Shinzo Abe, has said he wants to keep new issuance of JGBs in the 2007 financial year below that of 2006.
“It is expected that the issuance of refinancing bonds will shrink for the next few years,” says a spokesman for Mizuho Corporate Bank in Tokyo. “In addition, if tax revenue increases thanks to the economic recovery, that too will reduce new issuance of JGBs. It is highly likely that the heavy government borrowing since the collapse of the bubble economy in 1990 will continue to shrink.”