New BOJ chief slams Japan debt as 'abnormal'

TOKYO (AFP) - The new head of the Bank of Japan (BOJ) on Thursday called the country's eye-popping national debt "abnormal" and warned that Tokyo must avoid a plunge in confidence among bondholders.

Japan is struggling with chronically anaemic growth while its ever-increasing debt mountain stands at more than twice the size of the economy.

That is the worst ratio among industrialised nations and one set to grow as a rapidly ageing population strains the social welfare system.

"It is abnormal when the debt stands at more than twice GDP, and it's not sustainable," central bank chief Haruhiko Kuroda told parliament.

"It is extremely important to maintain confidence in financial and bond markets," he added.

Most of Japan's debt is held domestically, allowing it to sidestep the kind of criticism levelled at Greece and other eurozone nations by foreign debtholders.

Mr Kuroda, who was installed as BOJ governor last week, has pledged "all-out efforts" to rid Japan of its long-running deflation, which the Oxford University graduate previously branded as "abnormal" for a developed economy.

The 68-year-old former Asian Development Bank president was Tokyo's choice to lead the central bank as it tries to fuel growth and hit a two-percent inflation target.

The aim is to reverse years of falling prices that have crimped private spending and corporate investment.

The Bank of Japan holds its first policy meeting under Mr Kuroda next week, with widespread expectations it will launch aggressive monetary easing measures to kickstart the world's third-largest economy.

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