Japan debt servicing costs face climb as BOJ ends negative rates

Interest payments could triple in 10 years, squeezing government coffers

In addition to raising interest rates, the Bank of Japan is expected to reduce its purchases of Japanese government bonds as it ends its yield curve control policy. © Reuters

JUNTARO ARAI, Nikkei staff writer

March 20, 2024 08:14 JST

TOKYO -- The Japanese government faces mounting pressure to streamline its finances following the Bank of Japan's decision to end negative rates, with interest payments on bonds seen potentially tripling over the next decade.

Japan's nominal long-term interest rate will increase to 1.5% in fiscal 2028 from 0.6% in fiscal 2023 under a high-growth scenario, the Cabinet Office projects. This would lift annual interest payments by around 50% to 11.5 trillion yen ($76.2 billion) from 7.6 trillion yen.