By Henry Teitelbaum, Editor, P3Planet.com
As the focus of relief efforts turns from rescue to reconstruction in northeastern Honshu, attention is also starting to turn towards how Japan plans to pay for rebuilding the region’s shattered public infrastructure.
Unfortunately, the backdrop isn’t promising. Japan’s government, which will have overwhelming responsibility for covering insured losses from the disaster, is in no financial position to shoulder these costs.
Japan’s government debt, at over 225% of GDP at the end of 2010, was already the world’s highest before the earthquake, tsunami and nuclear disaster hit one month ago. While that debt is 90% owned domestically and financed by Japan’s high savings rate, it will constrain what the government is able to spend on reconstruction.
It seems inevitable, given the circumstances, that an unprecedented level of sustained long-term private sector financial support will also be needed. Continue reading Tsunami Disaster Should Put PFI At Top of Japan’s Rebuilding Agenda