Japanese Finance Minister Shunichi Suzuki warned that public finances were deteriorating and in a much more difficult situation amid growing pressure on the central bank to raise interest rates.
The Treasury estimates that every percentage point increase in interest rates will increase debt servicing by $29 billion, to $251 billion in fiscal year 2025-26.
The finance minister reaffirmed the Japanese government’s goal of running a budget surplus, excluding new bond sales and debt service spending, in the fiscal year through March 2026, knowing that Japan has failed to meet fiscal targets over the past decade.
Notably, Japan’s public debt is more than double its gross domestic product amid strong spending growth, especially in the wake of the spread of the Covid-19 pandemic.
