Japan's debt-servicing costs seen at record in next fiscal year, Kyodo reports

Japan's finance ​ministry expects debt-servicing costs to ​rise 17% to ‌a record ​36.64 trillion yen ($230 billion) in the next fiscal year, adding to pressure on the ‌country's already tattered finances, Kyodo News reported on Tuesday. The increase reflects plans to set the assumed interest rate for calculating debt servicing costs at ‌a 29-year high of 3.8% in its budget request for ‌next fiscal year.

The total value of budget requests from government ministries and agencies for fiscal 2027 is expected to exceed 130 trillion yen for the first ⁠time, ​up sharply from ⁠about 122 trillion yen in the current fiscal year, according to Kyodo. The surge ⁠is being driven largely by Prime Minister Sanae Takaichi's push for a ​more expansionary fiscal policy, including a public investment scheme that allows ⁠ministries to seek funding without a preset cap.

The government also plans to incorporate ⁠into ​the initial budget spending that in recent years was often financed through supplementary budgets, a move that could further inflate headline expenditure. The ⁠government will finalise budget requests at the end of this month before ⁠the finance ⁠ministry reviews them and compiles a draft budget, which is expected to be approved by the ‌cabinet at year-end.

($1 = ‌159.4700 yen)