Japan’s National Debt Hits Record ¥1,346.7 Trillion, Nears ¥11 Million Per Person

Japan’s national debt surpassed ¥1,346 trillion, reaching a record high.

The country’s total national debt, including government bonds and borrowings, stood at ¥1,346.6833 trillion at the end of June, the Finance Ministry said, according to the Nikkei and other media reports on Aug. 11. That was up ¥2.8407 trillion from the end of March.

The debt load has climbed to an all-time high as the government has failed to cover spending with tax revenue alone and has filled the shortfall by issuing government bonds and other debt.

Based on population estimates, Japan’s national debt amounts to about ¥10.95 million per person. The figure is set to rise further. Reflecting a supplementary budget worth ¥3.1135 trillion that passed parliament in June, national debt is expected to reach ¥1,492.8 trillion by the end of this year.

There are also concerns that tax-cut measures pushed by Prime Minister Sanae Takaichi could add to the fiscal burden.

The government is pursuing a plan to cut the food consumption tax rate to 1% from 8% for two years starting in April next year, while also providing subsidies equivalent to the remaining 1% to effectively eliminate consumers’ tax burden. The tax cut will require an estimated ¥5 trillion in funding. Takaichi has said the government will secure the money without relying on deficit-financing bond issuance.

Financial markets are also wary that Japan’s expansionary fiscal policy could push interest rates higher.

The Nikkei said market confidence will hinge on how much Japan can restrain further debt growth as major fiscal demands continue, including the consumption tax cut and higher defense spending.

Jang Ji-min, Hankyung.com contributing reporter, newsinfo@hankyung.com