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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Japanese lawmakers in the Diet approving 8.56 trillion yen stopgap budget amid upper house delays, realistic news illustration.
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Japan approves 8.56 trillion yen stopgap budget for fiscal 2026 amid upper house delays

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The Japanese government approved an 8.56 trillion yen stopgap budget on March 27 to fund operations for the first 11 days of fiscal 2026 starting April 1, due to stalled upper house deliberations on the main 122.31 trillion yen budget passed by the lower house earlier this month. This is the first such provisional measure in 11 years, backed by ruling and main opposition parties, and expected to pass parliament on March 30.

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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Defense Minister Shinjiro Koizumi said Friday that Japan's initial budget for defense spending and related costs in fiscal 2026 totals about 10.6 trillion yen ($66.5 billion), roughly 1.9 percent of its 2022 gross domestic product or around 1.5 percent using projected fiscal 2026 GDP. Japan aims to raise spending to 2 percent of GDP by fiscal 2027.

The National General Budget for this year totals $546.9 trillion, with the majority allocated to transfers and operating expenses. However, investment execution has been slow in January, reaching only 1.2% of the available appropriation. Key sectors like transportation show minimal progress, while others have yet to record any obligations.

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