Japan's debt-servicing costs are starting to surge

Japan’s debt trap is becoming more expensive as interest rates move higher.
Debt-servicing costs are projected to rise 17% to a record ¥36.6T, or roughly $230B, in fiscal 2027.
That would be the steepest increase in about 20 years.
The assumed interest rate used in the calculation is rising from 3.0% to 3.8%, its highest level in 29 years, while Japan’s 10-year government bond yield recently reached 2.945%, a three-decade high.
Total government budget requests are expected to exceed ¥130T for the first time, meaning debt servicing alone could consume roughly 28% of the total.
Japan could carry enormous debt for decades because borrowing costs stayed near zero.
Now that debt is gradually being refinanced at much higher rates, creating a dangerous feedback loop between yields, interest expense and fiscal stress.