Japan to Set Aside Record Spending for FY 2026

Tokyo, Dec. 24 (Jiji Press)–The Japanese government plans to set aside around 122.3 trillion yen in general-account spending under its fiscal 2026 budget, a record high for the second straight year following 115,197.8 billion yen in the previous year’s initial budget, people familiar with the matter said Wednesday. Tax revenue in the year starting next April is expected to reach a record 83.7 trillion yen thanks to higher prices and robust corporate earnings. With expenditures set to grow faster than tax revenue, however, the issue amount of government bonds, excluding refinancing bonds, is expected to increase to some 29.6 trillion yen from 28,647.1 billion yen under the fiscal 2025 initial budget. The government is slated to adopt its fiscal 2026 budget plan on Friday. It will be the first full-scale budget under Prime Minister Sanae Takaichi, who took office in October. The government plans to submit the budget plan to the Diet, the country’s parliament, in January, aiming to pass it by the end of fiscal 2025. Costs related to social security, which dominate most of general-account expenditures, will rise to a record high of some 39.1 trillion yen due to natural growth amid Japan’s aging population in addition to price and wage increases. The budget includes about 8.8 trillion yen in expenses for defense buildup and some 1 trillion yen in reserve funds. Debt servicing costs will expand to a record high of some 31.3 trillion yen from 28,217.9 billion yen in the fiscal 2025 initial budget. The government will raise the assumed interest rate to about 3 pct from 2 pct in line with higher long-term interest rates. END [Copyright The Jiji Press, Ltd.]