Japan gains ¥195 trillion fiscal windfall as inflation erodes debt
Business
Japan has gained a ¥195 trillion ($1.2 trillion) fiscal bonus because inflation made its huge government debt less valuable in real terms.
This windfall could give Prime Minister Sanae Takaichi more room to spend on defense spending and investments in strategic industries and other initiatives, since the country's debt payments are not rising as fast as market interest rates.
Tsutomu Watanabe warns gain is temporary
Former Bank of Japan official Tsutomu Watanabe called this a "debtor's gain," but warned the government not to get carried away.
This is a temporary benefit from moving out of zero inflation, not free money forever.
As he put it, "What's important is to use it wisely," or Japan might face higher borrowing costs down the road.