Japan Rejects Tax Cuts Amid Warnings of A Financial Crisis Worse Than Greece

In a speech that sparked significant political and economic debate,
Japanese Prime Minister Shigeru Ishiba rejected opposition parties’ calls for tax cuts,
stressing that the country’s fiscal situation is “worse than Greece.”
This striking statement reflects the mounting pressure on the public finances of the world’s third-largest economy.

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During a parliamentary session covered by Bloomberg, Ishiba emphasized that the government is not in a position to finance tax cuts by issuing more bonds, given the rising cost of borrowing.
He insisted that any additional government spending must be managed with extreme caution,
noting that Japan is facing an “extremely difficult financial situation” amid the accumulation of record-level debt.

Data from the International Monetary Fund showed that Japan’s public debt-to-GDP ratio reached 234.9% in 2025—the highest among advanced economies—compared to 142.2% in Greece, a country previously known for its severe eurozone debt crisis.

This comes at a time of growing calls to reduce the consumption tax, especially with the Upper House elections approaching in July.
The opposition hopes to leverage the economic pressure to galvanize voters.
However, Ishiba’s statements highlight the government’s more cautious approach, focusing on fiscal sustainability and avoiding risks related to deficits and sovereign debt.

This escalation in political rhetoric could impact Japanese markets,
as investors closely monitor any signs of changes in fiscal policy—particularly amid concerns over the impact of global interest rate hikes on the cost of financing Japan’s massive debt.

Japan Rejects Tax Cuts Amid Warnings of A Financial Crisis Worse Than Greece

Japan Rejects Tax Cuts Amid Warnings of A Financial Crisis Worse Than Greece

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