According to Japanese media reports, Japan's Ministry of Finance expects debt servicing costs to increase by 17.1% year-on-year in fiscal year 2027 (April 2027 to March 2028), reaching a record 36.6 trillion yen, the largest increase in nearly 20 years. This is mainly due to the Ministry of Finance raising the assumed interest rate for calculating government bond interest from 3% in fiscal year 2026 to 3.8%.

Meanwhile, the total budget request for fiscal year 2027 is expected to exceed 130 trillion yen, setting a new record for the fourth consecutive year. The bond market has reflected this pressure, with Japan's 10-year government bond yield briefly rising to 2.945% on August 18, a new high in nearly 30 years.