Japan's Public Sector Balance Sheet
IMF Working Papers, October 4, 2019
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- Japan's Public Sector Balance Sheet
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Bibliographic details
- Authors: Yugo Koshima
- Published: October 4, 2019
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513514529.001
Summary
- This paper compiles and reviews the evolution of Japan’s Public Sector Balance Sheet (PSBS).
- In the past, large crossholdings of assets and liabilities within the public sector played a role in sustaining a high level of public debt and low interest rates.
- The Fiscal Investment and Loan Fund (FILF) channeled all postal deposits and pension savings to financing of public sector borrowing.
- After the FILF reform in 2000, the Post Bank and pension funds shifted their assets to the portfolio investments and are seeking to maximize risk-adjusted returns.
- Population aging is expected to add more pressures on the PSBS, which already saw a considerable decrease of net worth over the last three decades.
Key findings on crossholdings and financing
- Large crossholdings of assets and liabilities within the public sector historically supported:
- a high level of public debt
- low interest rates
- The FILF functioned to channel all postal deposits and pension savings into financing public sector borrowing.
Changes following the FILF reform (2000)
- After the FILF reform in 2000:
- The Post Bank shifted assets to portfolio investments.
- Pension funds shifted assets to portfolio investments.
- These institutions are seeking to maximize risk-adjusted returns.
- The shift in asset allocation has changed the implications of crossholdings for public debt management.
Future pressures and fiscal outlook
- Population aging is expected to add more pressures on the PSBS.
- The PSBS already experienced a considerable decrease of net worth over the last three decades.
Subject areas and keywords (as listed)
- Subject: Debt financing, Economic sectors, Expenditure, Financial sector, Financial statements, Labor, Pension spending, Pensions, Public financial management (PFM), Public sector
- Keywords: asset allocation, FILF financing, FILF reform, FILF system, Financial sector, Financial statements, Fiscal Investment and Loan Fund, Fiscal Risks, Japan, Japanese Government Bonds, pension fund assets, Pension Reforms, Pension spending, Pensions, Public sector, Public Sector Balance Sheet, public sector financing, WP
Yugo Koshima. "Japan's Public Sector Balance Sheet", IMF Working Papers 2019, 212 (2019), accessed 9/14/2026, https://doi.org/10.5089/9781513514529.001
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