Japan's JGB Debt-Service Costs Soar to Record ¥36.6 Trillion Amid Rising Rates

Japan's government is facing a record-breaking debt-servicing burden in fiscal 2027, as rising interest rates push bond redemption and interest costs to ¥36.6 trillion ($230.3 billion). This represents a 17% increase from the previous record set in fiscal 2026.

The main driver behind this rise is the increasing interest rate used to calculate JGB interest payments, which has been raised to 3.8% for fiscal 2027 from 3.0% in the previous year's budget.

This adjustment reflects inflation and expectations of further rate hikes by the Bank of Japan, as well as fiscal-sustainability concerns surrounding the expansionary stance of Prime Minister Sanae Takaichi's cabinet.

The burden of debt-service costs is expected to consume nearly 30% of the total budget requests from Japanese government ministries for fiscal 2027, which are estimated to exceed ¥130 trillion ($817.9 billion).