course inject vitality into the japanese economy. at the same time, it is extremely important to reform the social security systems and to work on fiscal consolidation, since public concerns over the future of the pension system and public finances hamper economic growth by putting a brake on forward - looking spending and investment. weak economic growth has made firms, individuals, and the government reluctant to take on new challenges and push ahead with painful reforms, and has made the economy heavily dependent on fiscal spending for a prolonged period. as a result, government debt has ballooned, and the combined long - term debt outstanding of the central and regional governments in japan is forecast to reach 869 trillion yen at the end of march 2011, which is about 1. 8 times japan ’ s nominal gdp. japan is thus in no position to merely sit back and observe the sovereign debt problems in europe, which i touched upon earlier, and which were triggered by concerns about fiscal sustainability. a solution must be found before japan suffers a serious loss of credibility in the markets. c. measures taken by the bank as i said earlier, the bank continues to consistently make contributions as the central bank in order to overcome deflation and return the japanese economy to a sustainable growth path with price stability. the bank ’ s efforts through the conduct of monetary policy also aim to help strengthen japan ’ s economic growth potential. the bank must always be ready to proactively implement the necessary policies to achieve its objectives. going forward, the bank should continue to be proactive and do its utmost to bring the japanese economy back to a sustainable growth path with price stability. bis central bankers ’ speeches

the medium - to long - term inflation expectations – which are stable at the moment – possibly leading to a fall in the actual inflation rate. lastly, a technical factor is the possible effects of the base year revision for the cpi, which is scheduled to take place in summer 2011. taking into account the experience of past such revisions, it is highly likely that the year - on - year rate of change in the cpi on the basis of the new base year will be lower than that on the basis of the current base year. of course, such statistical changes leave economic activity unaffected, and with medium - to long - term inflation expectations stable and prospects for a moderate improvement in the aggregate supply and demand balance, it seems certain that the japanese economy is headed in the direction of overcoming deflation. d. outlook for economic activity and prices the outlook i just presented is my own personal assessment. let me now turn to the outlook for economic activity and prices, known as the outlook report, which the bank of japan releases semiannually, in april and october. the outlook report presents the policy board members ’ assessments for economic activity and prices based on the forecasts in the form of numerical values. in addition to the semiannual outlook report, the bank releases interim assessments in july and january, which present the bank ’ s revised projections. in the most recent projection released in january 2011, policy board members considered it most likely that real gdp in fiscal 2010 would grow 3. 3 percent on a year - on - year basis reflecting the rebound from the contraction in the preceding year. following the relatively high rate of growth in fiscal 2010, real gdp is then projected to continue increasing moderately in the following years, at a rate of 1. 6 percent in fiscal 2011, and 2. 0 percent in bis central bankers ’ speeches fiscal 2012. the year - on - year change in the core cpi is projected to remain negative in fiscal 2010 at minus 0. 3 percent – this excludes the effects of subsidies for high school tuition, which would cause a further decline of 0. 5 percentage point – but is expected to turn moderately positive thereafter, to plus 0. 3 percent in fiscal 2011 and plus 0. 6 percent in fiscal 2012. it should be noted, however, that these figures do not incorporate possible effects of the base year revision for the cpi this summer. policy board members make their forecasts in terms of a range of values rather than a point estimate, and they then attach a probability of realization to