On August 23, 2026, Korean media Seoul Economic Daily reported that in Japan, which has government debt outstanding even by global standards, the government's aggressive fiscal policy and rising long-term interest rates are overlapping, leading to growing concerns that the fiscal burden will further increase.

According to the article, Japan's Ministry of Finance plans to appropriate a record high of 36.6 trillion yen for "government bond expenses" to cover principal and interest payments on government bonds in its budget request for fiscal year 2027. This is an increase of 5.3 trillion yen from the initial budget of 31.3 trillion yen for fiscal year 2026, a substantial increase of about 17%. A major factor is said to be the upward revision of the assumed interest rate for calculating bond interest payments from 3% to 3.8%.

Furthermore, the total budget request for fiscal year 2027 is expected to exceed 130 trillion yen, surpassing the previous fiscal year's 122 trillion yen, potentially marking a new record high for the fourth consecutive year. Prime Minister Sanae Takaichi has positioned this budget compilation as "the first year of responsible aggressive fiscal policy," but many requested items do not specify concrete amounts, suggesting that the final budget size could swell even further. While the government is estimated to require over 10 trillion yen in additional financial resources, a Cabinet Office estimate projects that the increase in tax revenue for fiscal year 2027 will only be around 6.8 trillion yen.

Therefore, it is pointed out that tax revenues alone may not cover expenditures, and a "debt-dependent" fiscal management, where the shortfall is covered by borrowing through government bonds and other means, may continue.

The article points out, "What is becoming an even greater problem is long-term interest rates." In the Japanese government bond market on August 18, the yield on 10-year government bonds rose to 2.945%, reaching its highest level in approximately 30 years. A rise into the 3% range is also in sight. If interest rates rise, when government bonds issued at low interest rates mature, they will need to be refinanced at higher interest rates. As a result, the government's interest payment expenses could further increase. Japan's outstanding government debt reached 204.4% of GDP as of the previous year, an exceptionally high level among major developed countries.

Furthermore, inflation continues in Japan. As rising crude oil and raw material prices spill over into daily necessities, the "core-core CPI" in July rose 1.9% year-on-year, with the pace of increase expanding for the first time in nine months. The article reported, "Given these circumstances, expectations are growing that the Bank of Japan will raise the policy interest rate to 1.25% at its monetary policy meeting in September."

Regarding this, Korean netizens commented with voices such as: "Is Japan's fiscal situation really okay?", "How did it come to this?", "It's probably their own doing," "It's amazing that their debt is more than double their GDP," "If interest rates also rise, just the interest payments seem tough," "Isn't there a limit to aggressive fiscal policy?", and "A large part of Japan's system worked because of its low interest rates until now."

Additionally, other comments included: "This is no time to worry about other countries," "Even so, Japan has many overseas assets, so it cannot be simply compared to Korea," "Korea will likely become like Japan in the not-too-distant future," and "We should learn from Japan's situation and think about Korea's future." (Translation/Editing by Higuchi)