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Looking at the latest data on Japanese government bonds, I can’t help but do some quick calculations for everyone.
Currently, the yield on Japan’s 10-year government bonds stands at 2.349%. Based on this rate, Japan’s central government debt is approximately 1,324 trillion yen, and the annual interest expense could reach 31.1 trillion yen. Sounds like a huge number, right? But here’s the more sobering part—
Japan’s central government revenue (mainly from taxes, tariffs, and other normal income) is only about 83.7 trillion yen. This means that if interest were paid in full at the 2.349% rate, interest expenses would account for 37% of the fiscal revenue.
Of course, this is a theoretical estimate. The actual situation isn’t that extreme, since the Bank of Japan has various policy tools to buffer the impact. But the numbers are there, and the future pressure is very real.
To be honest, Japan’s debt problem is no longer a new issue. The key question is, when will this trend finally turn around?