New Govt. Bond Issuance Expected To Rise In Fy2021

New govt. bond issuance expected to rise in FY2021

Japan's Finance Ministry has indicated new government bond issues in fiscal 2021 may increase for the first time in 11 years. The announcement comes amid rising social security costs such as medical care and pensions.

The ministry has worked out an estimate which indicates that if the economy continues to grow by 1.5 percent in nominal terms, social security costs in fiscal 2023 will increase to 38.5 trillion yen, or about 352 billion dollars. That is up 2.6 trillion yen, or nearly 24 billion dollars, from the budget plan for fiscal 2020.

Debt-servicing costs would increase by 3.1 trillion yen, or about 28 billion dollars, to 26.5 trillion yen, or about 242 billion dollars.

This would bring the total general account budget to 107.6 trillion yen, or about 985 billion dollars, up 4.9 trillion yen, or about 45 billion dollars, from fiscal 2020.

Since fiscal 2011, the issuance of government bonds has been reduced from the previous year in the initial budget, due to an increase in tax revenues and other factors.

But the estimate suggests new bond issues will mark the first increase in 11 years in fiscal 2021. Money raised in this way is likely to come to 35.2 trillion yen, or about 322 billion dollars, in fiscal 2023. That's up nearly 3 trillion yen, or about 27 billion dollars, from fiscal 2020.

The estimate adds even if the government's target of 3 percent nominal economic growth is achieved, the amount of newly issued government bonds is still expected to increase in fiscal 2022.