Japan's government debt hits record ¥1.34 quadrillion at end of 2025

Japan's total government debt rose to a record ¥1.34 quadrillion as of the end of December 2025, up ¥8.58 trillion from three months earlier, the Finance Ministry announced on Tuesday. General government bonds stood at ¥1.09 quadrillion, an increase of ¥6.27 trillion.

The Japanese government's total debt climbed by ¥8.58 trillion from the previous quarter to a record ¥1.34 quadrillion as of December 31, 2025, according to the Finance Ministry's announcement on Tuesday.

Within this total, general government bonds increased by ¥6.27 trillion to ¥1.09 quadrillion. Borrowings rose ¥2.95 trillion to ¥44.1 trillion, while financing bills—used for short-term funding needs—fell ¥99.8 billion to ¥100 trillion.

The draft state budget for fiscal 2026, to be discussed in a special parliamentary session starting February 18, plans to issue ¥29.5 trillion in new government bonds, up from ¥28.6 trillion in the initial fiscal 2025 budget.

Amid rising interest rates, debt-servicing costs, which include bond redemptions and interest payments, are projected to reach a record ¥31.2 trillion.

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Tokyo Stock Exchange traders celebrate as Nikkei hits record 54,364.54, driven by election speculation and weak yen.
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Japan's Nikkei stock average hits record high above 54,000

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On January 14, 2026, Japan's Nikkei stock average surged to a record high of 54,364.54. Speculation over a snap election by Prime Minister Sanae Takaichi fueled hopes for expanded fiscal stimulus, while a weakening yen boosted exporters. Meanwhile, bond yields rose amid fiscal concerns.

The Japanese government expects its interest payments on outstanding debt to roughly double over the next four years due to the Bank of Japan's gradual rate hikes. Payments are projected at ¥21.6 trillion ($139 billion) in the year starting April 2029, up from the current year's budgeted ¥10.5 trillion.

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The fiscal 2026 budget under Prime Minister Sanae Takaichi has gained support from the Democratic Party for the People, raising prospects of passage in its original form. However, as the first budget with debt-servicing expenses exceeding ¥30 trillion, insufficient curbs on social security spending have failed to allay market concerns. Rising interest rates pose a risk.

Japan's 10-year government bond yield reversed course and edged higher on Tuesday following a moderately firm outcome at a same-maturity bond auction. The yield rose 0.5 basis points to 2.12%. Markets remain concerned that the Bank of Japan is lagging in addressing inflation risks, anticipating further rate hikes.

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On Friday, December 19, the Insee announced that France's public debt now stands at 3,482 billion euros, or 117.4% of GDP, a record level outside times of war or pandemic. This increase of 65.9 billion euros over three months highlights a worrying trajectory, with analysts warning of a potential market crisis if no correction occurs.

The Egyptian government plans to issue treasury bills, bonds, and sukuk worth a combined EGP 2.703trn during the third quarter of fiscal year 2025/2026, according to data from the Ministry of Finance. The Central Bank of Egypt will execute these issuances on behalf of the government to refinance maturing debt and fund the state's general budget deficit.

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Corporate bankruptcies in Japan involving liabilities of at least ¥10 million reached 887 in January, the highest in 13 years, according to Tokyo Shoko Research. The figure rose 5.5% from a year earlier, marking an increase for the second straight month.

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