Hyogo Debt Burden Forces Tighter Controls
Hyogo Prefecture has been placed under a system requiring central government approval for new borrowing after its debt repayment burden exceeded a nationally defined threshold, raising concerns that worsening finances and higher interest rates could push the prefecture closer to serious fiscal distress. (News On Japan)
HYOGO - With its debt repayment burden surpassing a nationally defined limit, Hyogo Prefecture has been placed under tighter controls, raising fears that worsening finances and higher interest rates could lead to serious fiscal distress. The prefectural government disclosed its fiscal 2025 results to a committee on August 18, revealing that its three-year average debt service ratio reached 19.2%, surpassing the central government's threshold of 18%.
Consequently, Hyogo has been mandated to seek approval from the central government before issuing new local government bonds, a provision designed to curtail borrowing. The prefecture cited higher public investment levels and ongoing debt repayments for reconstruction following the Great Hanshin-Awaji Earthquake as contributing factors to the financial strain.
Should the present trend persist, Hyogo could be categorized as an early fiscal rehabilitation entity in fiscal 2031, marking the first prefectural government in Japan to reach this precarious status, ahead of fiscal collapse. In response, the prefecture plans to curtail public works investments by at least 10% over a decade, commencing in fiscal 2027.
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