Japan's National Debt Service Costs to Surge

Feb 03, 2024 | News On Japan

TOKYO - Amidst a backdrop of rising interest rates, calculations have shown that the cost of servicing Japan's national debt, including interest payments, is expected to increase by over 7 trillion yen in the next three years.

The Ministry of Finance has submitted to the Diet a "future fiscal year impact estimate" based on the 2024 fiscal year budget, outlining projections for expenditures and revenues over the next three years.

Assuming a nominal growth rate of 3%, the national debt service cost, which is projected to be 27 trillion yen in the 2024 budget, is anticipated to rise to 34.2 trillion yen by the 2027 fiscal year.

Additionally, while last year's estimate for the 2026 fiscal year put the national debt service cost at 29.8 trillion yen, the current estimate has increased to 31.8 trillion yen, 2 trillion yen more, due to a significant rise in the expected interest rates.

This shift towards higher interest rates, after a long period of low rates, indicates that the national debt, which has accumulated to over 1,000 trillion yen, will become an even greater fiscal burden.

Source: ANN

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