JAPAN'S FY2026 BUDGET REQUESTS HIT RECORD YEN 122 TRIL ON DEBT COSTS - TOKYO JAPAN

JAPAN'S FY2026 BUDGET REQUESTS HIT RECORD YEN 122 TRIL ON DEBT COSTS - TOKYO JAPAN

@Jr_Paku Midin Channel

TOKYO

Budget requests by Japanese ministries for fiscal 2026 totaled 122.45 trillion yen, hitting a record high for the third straight year, with rising interest rates boosting debt-servicing costs, the Finance Ministry said.

The ministry will assess the requests and may trim expenditure, but the initial budget for the fiscal year starting next April could exceed this year's record 115.2 trillion yen, as the country faces swelling social security costs and defense spending.

The increase in spending is likely to further pressure Japan's fiscal health, already the worst among major developed economies. The ministry will compile a draft budget by the end of December before presenting it to parliament for deliberation.

The requests were compiled as Prime Minister Shigeru Ishiba's minority government faces calls from opposition parties to increase spending or cut taxes at a time when the nation is grappling with rising prices of food and other items.

With the ruling bloc having lost control of both chambers of parliament under Ishiba's leadership, his administration will need opposition backing to pass the spending plan.

Among the requests, debt-servicing expenses, sought by the Finance Ministry to cover interest payments and bond redemptions, rose 14.8 percent from the previous year's initial budget to a record 32.39 trillion yen, driven by higher bond yields.

Borrowing costs have recently climbed on expectations that the Bank of Japan may raise rates further as well as on concerns over Japan's fiscal health. The country faces a debt more than twice the size of its economy.

The Ministry of Health, Labor and Welfare accounted for the largest share at a record 34.79 trillion yen, driven by ballooning welfare costs amid a rapidly aging population.

The Defense Ministry's request also reached a record at 8.79 trillion yen, as Japan plans to expand spending to confront regional security challenges, including China's military activities and North Korea's ballistic missile and nuclear programs.

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