Japan Panel Begins Fiscal 2026 Budget Talks

Tokyo, Nov. 5 (Jiji Press)–A subcommittee of a finance ministry advisory panel Wednesday started discussions to formulate the Japanese government’s budget for fiscal 2026, which starts in April next year. It will be the first budget compiled under Prime Minister Sanae Takaichi’s administration. She has pledged to pursue an aggressive yet responsible fiscal policy. Budget requests from government ministries and agencies under former Prime Minister Shigeru Ishiba reached a record high of over 122 trillion yen, reflecting increased spending aimed at boosting wages and addressing inflation. With expectations for even greater fiscal spending, balancing fiscal soundness with expansion will be a key challenge. In her policy speech to parliament on Oct. 24, Takaichi said she would “strategically deploy fiscal measures” to build a “strong economy.” She pledged to achieve economic growth through public and private investment in strategic sectors while ensuring fiscal sustainability by increasing tax revenues. But fiscal expansion without financial resources could undermine market confidence and lead to further fiscal deterioration through higher interest rates in Japan. The Finance Ministry estimates that debt-servicing costs will rise from the current 10.5 trillion yen to 34.4 trillion yen in fiscal 2034 if interest rates on Japanese government bonds increase by 1 percentage point from assumed levels in fiscal 2026 and beyond. At the subcommittee meeting, members said that “maintaining fiscal credibility will support growth” and that “it’s important to secure fiscal reserves in preparation for unexpected emergencies.” “Market confidence will be damaged if economic growth and fiscal consolidation are not achieved at the same time,” Hiroya Masuda, acting chair of the subcommittee, told a press conference after the meeting. The government needs to manage its finances appropriately, he added. The Fiscal System Council, which advises the finance minister, plans to compile its proposals in late November or early December so that they can be reflected in the government’s budget, which is usually adopted at a cabinet meeting in late December. END [Copyright The Jiji Press, Ltd.]