Fiscal Projections and Debt Sustainability in Japan

Mitsuru Katagiri, Junko Koeda, Hiroaki Miyamoto, Makoto Nirei and Takashi Unayama

Asian Economic Policy Review, 2025, vol. 20, issue 2, 222-232

Abstract: Japan's government debt, currently at approximately 250% of GDP, is the highest among the advanced economies and raises significant concerns about fiscal sustainability. This paper employs debt sustainability analysis to assess Japan's long‐term fiscal sustainability given a backdrop of rising inflation and potential increases in interest rates because of the normalization of monetary policy. Our baseline scenario projects a persistent primary deficit leading to a divergent debt‐to‐GDP trajectory, underscoring the need for some fiscal adjustments.

Date: 2025
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https://doi.org/10.1111/aepr.12508

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Persistent link: https://EconPapers.repec.org/RePEc:bla:asiapr:v:20:y:2025:i:2:p:222-232

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