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Japan's Fiscal CrisisThe Ministry of Finance and the Politics of Public Spending, 1975-2000$
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Maurice Wright

Print publication date: 2002

Print ISBN-13: 9780199250530

Published to Oxford Scholarship Online: October 2011

DOI: 10.1093/acprof:oso/9780199250530.001.0001

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Coping with Fiscal Stress

Coping with Fiscal Stress

(p.578) 29 Coping with Fiscal Stress
Japan's Fiscal Crisis

Maurice Wright

Oxford University Press

Japan's main budget exhibited three symptoms of fiscal stress from 1975 through to 2000. First, a recurring deficit, persisting throughout the business cycle, that is, including years of both economic growth and decline. Second, an increasing level of outstanding debt. Third, rising costs of servicing that debt, pre-empting an increasing share of the total budget, and squeezing the amount of mandatory and discretionary programme expenditures. Those symptoms of acute fiscal stress first appeared in 1974–5, when the Ministry of Finance was forced to borrow to cover the costs of fast rising current expenditure in the ‘welfare era’ inaugurated in fiscal year 1973, and the slowdown in the economy following the first oil crisis. In 1965, the budget became unbalanced for the first time since the end of the Allied Occupation. It remained so for the rest of the century. The growth of central government expenditure and falling tax revenues were the main causes of the deterioration in the national finances in the last quarter of the 20th century.

Keywords:   budget, fiscal stress, debt, Ministry of Finance, fiscal deficit, central government expenditure, tax revenues, fiscal reconstruction

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