Salient to Investors:

Japan’s national debt  is larger than the economies of Germany, France and the UK combined, more than twice the size of the economy, and its fiscal deficit will expand to 10.3 percent of GDP in 2013.

Moody’s Investors Service warned that a worsening of finances would erode confidence in government bonds.  Thomas Byrne at Moody’s said tax reform and containment of social security expenditure would further reduce the budget deficit and enhance Japan’s debt-servicing capacity.

Long Hanhua Wang at Royal Bank of Scotland said ballooning public debt underlines the need for Abe to push for a sales-tax increase, a minimum policy requirement for his government.

Koichi Hamada formerly at Yale said the BOJ should be prepared to add stimulus if the sales-tax rise hurts the economy.

The National Institute of Population and Social Security Research said overall social welfare benefits rose to 103 trillion yen in 2010 from 47 trillion yen in 1990.

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