Japan Sets No Cap on Investment for FY ’27 Budget Requests

Tokyo, July 30 (Jiji Press)–The government Thursday adopted budget request guidelines for fiscal 2027 featuring a new investment quota with no caps on the amounts that can be requested. The guidelines also called for ending the government’s reliance on supplementary budgets and including recurring measures in the regular budget. The total amount of budget requests from government agencies is therefore estimated to exceed the record high of 122 trillion yen sought for fiscal 2026. Budget request guidelines are rules that government agencies follow when submitting their budget requests to the Finance Ministry. The latest guidelines are the first that have been compiled under Prime Minister Sanae Takaichi’s administration. Budget requests will be submitted to the ministry by the end of August. The government will draw up a draft budget for fiscal 2027 by year-end, based on the results of the ministry’s examination of the requests. “There is no longer anything that can be called a ceiling” on budget requests, Takaichi told a meeting of the Council on Economic and Fiscal Policy before the cabinet approval of the guidelines. “What’s important is not the size of fiscal spending but its effects on economic growth,” she said, expressing her policy of intensively allocating budget funds to measures effective in achieving economic growth. In line with the basic policy on economic and fiscal management and reform adopted in June, the newly proposed investment quota is designed to allocate money to projects related to crisis management and growth sectors that are expected to boost the country’s potential economic growth rate. In order to promote domestic investment, the quota, billed as a framework to build a strong and prosperous Japan, will basically cover measures that are based on plans stretching over more than one year. For the quota, government agencies can ask for funds without specifying the amounts, while measures in sectors considered particularly important for national security will be managed in a special account. In the budget request guidelines, social security spending, which accounts for 30 pct of the total budget expenditure, is estimated to post a natural increase of 390 billion yen, down from 400 billion yen estimated for fiscal 2026. As for discretionary spending, requests of up to 20 pct above the levels under the fiscal 2026 initial budget are accepted. Requests for spending increases reflecting the economic and price situations continue to be allowed. END [Copyright The Jiji Press, Ltd.]