Goldman Sachs Japan Economists Expect FY2027 Calendar-Year JGB Issuance to Rise About ¥13 Trillion
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Key Views
- General expenditure (ex-debt service) may be trimmed ~¥3 trillion, but defense costs and consumption-tax-cut local subsidies not yet requested could add ~¥3 trillion (over ¥4 trillion if defense reaches 3.5% of GDP), so the initial budget is unlikely to shrink versus requests.
- Total JGB issuance is seen rising ~¥19 trillion (refinancing bonds +¥1.7 trillion); retail JGBs, at a ¥12 trillion annualized pace in September 2026, could absorb ~¥6 trillion.
- The base case assumes no second FY2026 supplementary budget; one capped at ¥5 trillion needs no extra issuance, and shifting FY2027 requests into it would cut the FY2027 deficit and improve near-term supply-demand, but would divert future redemption funds from the National Debt Consolidation Fund.
Outlook
Issuance projections may shift materially as the budget process unfolds.
Key exhibits
Exhibit 1
Exhibit 2
Exhibit 3
