Japan FY 2026 Budget Features Investments for Strong Economy

Tokyo, Dec. 26 (Jiji Press)–The Japanese government’s draft fiscal 2026 budget, adopted Friday, highlights generous funding for its crisis management and growth investment policies to build a strong economy, a goal set by the administration of Prime Minister Sanae Takaichi. Investments through public-private collaboration in 17 areas, including artificial intelligence and semiconductors, quantum technology, and aerospace, will serve as the centerpiece of the country’s growth strategy. The government will also spend 1,239 billion yen from a special account to beef up the foundations of the AI and semiconductor sector, which faces intense global competition. The government earmarked 120 billion yen for measures to revitalize the domestic shipbuilding industry and 200 billion yen for a space strategy fund under its fiscal 2025 supplementary budget. Under the fiscal 2026 budget, a tax break program will be set up to encourage companies to make drastic capital investments. Funds for supporting scientific research, which have stood largely unchanged, will be increased by 10.1 billion yen from the fiscal 2025 initial budget to 247.9 billion yen. Through the move, the government aims to strategically promote research and development on AI, quantum technology, biotechnology, space and other fields, as well as basic research. As part of measures tackling soaring prices, the government will raise the standard prices for public programs, increasing, for example, benefits to children orphaned by traffic accidents, which have been kept unchanged for 45 years. Medical service fees will also be revised to increase base wages of workers in the sector by 3.2 pct in fiscal 2026 and fiscal 2027. The budget also highlights consideration to the ruling Liberal Democratic Party’s coalition partner, the Japan Innovation Party (Nippon Ishin no Kai). The draft budget sets aside about 700 billion yen for programs to reduce elementary school lunch fees and high school tuition fees to zero, both set to be launched in fiscal 2026, as part of the JIP’s signature policy of making education free of charge. END [Copyright The Jiji Press, Ltd.]