Japan's Government Debt Surpasses 214% of GDP Amid Avoidance of Sovereign Default

Japan's government debt-to-GDP ratio stands at an unprecedented 214.5% as of end-2025, surpassing Italy's 134.7% and the United States' 122.3%, according to data from Japan's Ministry of Finance.

This high level of debt has not led to a sovereign default crisis, however, due to domestic ownership of its yen-denominated government bonds.

The Bank of Japan holds approximately 43% of outstanding Japanese government bonds, while domestic banks hold about 16%, insurance companies 14%, and pension funds 6%. Foreign investors account for no more than 13%.