The balance of long-term Japanese government debt may have topped 1,000 trillion yen ($8.2 trillion) for the first time at the end of March, officials said Thursday.
The estimate signals that the nation’s fiscal health, already the worst among major developed countries, has been further deteriorating on swelling social security costs as a result the aging population, falling tax revenues and emergency spending in response to the coronavirus pandemic, the officials said.
Growing interest payments on the accumulated debt following a recent uptrend in bond yields would be a headache for the government.
The long-term debt balance, which excludes some types of bonds, is likely to have reached 1,030 trillion yen on Thursday, the last day of fiscal 2021. It increased 1.5 times over the last 10 years.
The Finance Ministry will announce the results in May.
For fiscal 2022, which starts Friday, the government plans to spend a record of over 107 trillion yen in the initial budget, largely affected by snowballing welfare costs. While expecting tax revenues of about 65 trillion yen, it plans to issue bonds to help cover the shortfall.
Interest payments in the upcoming year are expected to total more than 8.2 trillion yen, well above the 5.4 trillion yen in defense spending under the budget.
To finance measures to counter the pandemic, the government has compiled supplementary budgets since fiscal 2020, another factor that put pressure on Japan’s fiscal health.
The government is already expected to draw up an extra budget for the next fiscal year in a bid to shield the economy from recent oil and other commodity price hikes, and the continued fallout from the COVID-19 crisis.