Japan Eyes Record 36 T. Yen for Debt-Servicing Costs

Tokyo, Aug. 25 (Jiji Press)–Japan’s Finance Ministry plans to seek a record 36,638.6 billion yen in debt-servicing costs in its budget request for fiscal 2027, which starts next April, it was learned Tuesday. The figure is up by 5,362.8 billion yen from the amount allocated in the fiscal 2026 initial budget. With long-term interest rates climbing amid inflation and concerns about fiscal deterioration in Japan, higher interest payments will likely drive up debt-servicing costs. The assumed interest rate on long-term Japanese government bonds is set to be raised to 3.8 pct for fiscal 2027 from 3.0 pct for fiscal 2026. The rate is used to calculate the government’s debt-servicing costs. As a result, interest payments are expected to rise 27.2 pct from the fiscal 2026 initial budget level to 16,588.8 billion yen. The ministry’s budget request, including the debt-servicing costs, will rise 15.1 pct to 38,694.8 billion yen. Reserve funds for contingencies, such as natural disasters, will be reduced to 500 billion yen from 1 trillion yen earmarked under the fiscal 2026 budget. On Aug. 18, the yield on the latest issue of 10-year JGBs, regarded as the country’s benchmark long-term interest rate, rose to 2.945 pct at one point, hitting its highest level since October 1996, according to Japan Bond Trading Co. END [Copyright The Jiji Press, Ltd.]