TOKYO, December 17 (ANI): Japan’s government is considering its largest-ever initial budget of more than 120 trillion yen, or about USD 775 billion, for the next fiscal year, Kyodo News reported. The move reflects Prime Minister Sanae Takaichi’s push for aggressive spending to support an economy grappling with persistently high prices.
If approved, the plan would surpass the previous record initial budget of 115.2 trillion yen cleared under former prime minister Shigeru Ishiba for fiscal 2025. Kyodo News reported that the increase is being driven by rising personnel expenses and other fixed costs as inflation continues to weigh on the economy, even as concerns mount over Japan’s fragile public finances.
For fiscal 2026, which begins in April, debt-related spending, including interest payments and bond redemptions, is expected to hit another record, exceeding 28.2 trillion yen, the report said. Japan already carries the heaviest public debt burden among advanced economies.
Earlier this week, parliament approved an 18.3 trillion yen supplementary budget for fiscal 2025 to fund Takaichi’s expansionary economic package aimed at easing rising living costs. The bill cleared the upper house just before the current parliamentary session ended, after being passed by the lower house last week.
Although the ruling coalition led by Takaichi’s Liberal Democratic Party does not hold a majority in the upper chamber, the package received backing from some opposition groups, including the Democratic Party for the People, after the government accepted parts of their demands related to relief measures.
Under the banner of “responsible and proactive public finances,” the latest stimulus is the largest since fiscal 2022, when Japan ramped up spending during the COVID-19 pandemic. The program focuses on curbing the impact of inflation and encouraging investment to revive economic growth.
Despite an expected 2.9 trillion yen increase in tax revenue, the government plans to raise 11.7 trillion yen through fresh bond issuance, covering more than 60 percent of the package, Kyodo News reported.
Financial markets have reacted nervously, with the yen and Japanese government bonds facing selling pressure and long-term interest rates rising in recent days.
To cushion households from high costs, the government has allocated 8.9 trillion yen for relief measures. These include electricity and gas subsidies for the first three months of next year, cash handouts for families with children, and increased financial support for local governments.
Another 6.4 trillion yen has been earmarked for investment related to crisis management and long-term growth, aligning with Takaichi’s push to build what she has described as a “strong economy.”
The supplementary budget also includes 1.7 trillion yen for security and diplomacy, allowing Japan to meet its target of raising defense-related spending to 2 percent of GDP in fiscal 2025, two years earlier than initially planned.
About The Author
