Japan FY ’26 Budget Policy to Highlight Investment Promotion

Tokyo, Nov. 27 (Jiji Press)–Japan’s upcoming basic policy for the fiscal 2026 regular budget will highlight spending to promote investment in artificial intelligence and other select areas in order to realize a powerful economy, a draft showed Thursday. The draft was presented at a meeting of the government’s Council on Economic and Fiscal Policy, headed by Prime Minister Sanae Takaichi. It also underscored the importance of “responsible and proactive” public finances, reflecting Takaichi’s economic growth strategies. “It’s very important to secure necessary funds under a regular budget,” Takaichi told the meeting. She also announced plans to deepen discussions on the medium- and long-term budget framework to enhance the predictability of public and private investment. The draft said that the government will balance economic revitalization and fiscal consolidation by lowering the ratio of government debt to gross domestic product, as the primary budget balance at the central and local governments is improving. Takaichi has said that the government will consider aiming to achieve a primary surplus over years, changing its target currently tied to a single-year balance. Nongovernmental council members expressed support for such a change Thursday. A primary surplus refers to a situation in which spending on policy measures is financed without new debt issuance. The draft envisions intensive investments in economic security-related fields, such as AI, semiconductors and shipbuilding. Also included are measures to allow smaller businesses to raise sales prices to reflect higher costs and improve their productivity so that they will find it easier to raise wages. The draft said that existing policy measures will be drastically expanded if they are expected to contribute to economic growth, while those found not very effective will be strictly reviewed. It called for setting up a national council for the comprehensive reform of the social security and tax systems, including the introduction of refundable tax credits. END [Copyright The Jiji Press, Ltd.]