Japan’s state debt tops ¥1,300 trillion for 1st time
Tokyo: Japan’s state debt swelled to a record 1,311.04 trillion yen ($9 trillion) as of the end of June, topping the 1,300 trillion yen mark for the first time ever, government data showed this week, underscoring its dire fiscal health.
The debt increased by 13.88 trillion yen from three months earlier, as Japan has had to ramp up spending to help households hit by accelerating inflation. The total is more than twice the size of the 600 trillion yen Japanese economy.
The Bank of Japan has entered its interest rate hike cycle and plans to cut its buying of government bonds, as it whittles down massive monetary stimulus provided over the past decade or so to achieve its inflation goal of 2 percent.
Borrowing costs are expected to rise for households and businesses and debt-servicing costs will increase for the government. The BOJ owned about half of the outstanding government debt in June as part of its powerful monetary easing.
According to the Finance Ministry, government bonds totaled 1,160.14 trillion yen, up 3.03 trillion yen from the end of March, making up the bulk. Of the total, general bonds came to 1,059.56 trillion yen, up 5.91 trillion yen.
The government uses tax revenue to redeem and pay interest on general bonds.
Japan has increased fiscal spending to ride out the COVID-19 pandemic and the ongoing cost-of-living crisis partly caused by Russia’s war on Ukraine that sent energy prices higher. While efforts are under way to cut spending, the government relies on debt issuance to fund about a third of its annual expenditure.
