Japan FY 2026 Budget Expected to Top 120 T. Yen

Tokyo, Dec. 22 (Jiji Press)–The Japanese government is expected to compile a state budget for fiscal 2026 with record general-account expenditures of over 120 trillion yen. The spending for the year from next April will top the current all-time high of 115,197.8 billion yen in the initial fiscal 2025 budget reflecting higher social security and debt-servicing costs. The cabinet of Prime Minister Sanae Takaichi wants to adopt on Friday an initial fiscal 2026 budget to be worked out through final negotiations between the finance minister and other cabinet ministers. The Takaichi administration, which advocates an aggressive but responsible fiscal policy, aims to support corporate activities with “strategic fiscal spending” while tackling spending reform by reviewing special tax incentives and subsidies. In the area of social security expenses, which account for 30 pct of general-account expenditures, the government has faced strong demands from pressure groups for government-set prices and fees to reflect inflation and rising wages. There is also a natural spending increase resulting from the aging of the population. In response to requests from the medical industry, the government plans to raise fees to cover wages chiefly for doctors and nurses by 3.09 pct, compared with the previous 0.88 pct hike in fiscal 2024. Although the government-administered drug prices are expected to be lowered by about 0.8 pct, overall social security costs will increase in the end. With existing expenses also going up amid inflation, the government will have to cover income shortfalls with debt issues, which together with rising long-term interest rates is estimated to push up the debt-servicing costs to a record 13,043.5 billion yen, up 2,520.5 billion yen from the initial budget for the current year. Defense expenses are expected to hit a record high of about 9 trillion yen. The government also plans to set aside funds to make high school tuition free and offer free meals at elementary schools. END [Copyright The Jiji Press, Ltd.]