Japan FY 2027 Budget Requests Hit Record 143 T. Yen

Tokyo, Sept. 4 (Jiji Press)–General-account budget requests from Japanese government ministries and agencies for fiscal 2027 totaled a record 143,065.6 billion yen, the Finance Ministry said Friday. The total requested amount for the year starting next April rose by 16.8 pct from 122,445.4 billion yen sought for the fiscal 2026 budget, reaching a record high for the fourth consecutive year. The jump reflected the government’s decision to include in the initial budget funds for recurring measures that had previously been earmarked under supplementary budgets, as well as the creation of a new investment quota with no ceiling on the amount of funding that can be requested. The fiscal 2027 requests were roughly 2.5 trillion yen higher than the sum of the fiscal 2026 initial budget and the fiscal 2025 supplementary budget. General-account requests for the new investment quota, to be used for crisis management and growth investments, totaled 12,173 billion yen. The ministry will carefully examine the requests before the fiscal 2027 budget is compiled at the end of this year. “We will focus on the cost-effectiveness of individual measures and seek to produce a lean, efficient budget by eliminating waste,” Finance Minister Satsuki Katayama said at a press conference after a cabinet meeting Friday. The ministry announced the same day that requests under the new investment quota will be assessed based on whether they will contribute to growth and spur private-sector investment. With long-term interest rates rising to 30-year highs amid growing market concerns about Japan’s fiscal deterioration, it remains to be seen whether the government can balance growth spending with fiscal sustainability, analysts said. Requests under the new investment quota included 4,525 billion yen from the industry ministry for policies related to artificial intelligence and semiconductors and measures to secure supplies of critical minerals, as well as 2,183 billion yen from the education ministry. The Defense Ministry requested funding for many programs without specifying the amount of funding needed, as the country is set to update its three key national security documents later this year. Its actual request for the fiscal 2027 budget may therefore increase by several trillion yen. Total requests under the investment quota, including those under a special account for energy-related measures, came to 14.2 trillion yen. Social security-related expenditures also increased amid inflation and an aging population. The welfare ministry requested a total of 36,580.3 billion yen, including funding under the investment quota. Meanwhile, the Finance Ministry raised its assumed long-term interest rate, used to calculate coupon payments on government debt, to 3.8 pct from 3.0 pct in its fiscal 2026 request, reflecting rising long-term interest rates. As a result, the ministry requested a record 36,638.6 billion yen to cover debt-servicing costs, an amount higher than the welfare ministry’s overall request. Budget requests for the government’s fiscal investment and loan program totaled 19,040 billion yen, up 22 billion yen from the initial level for the fiscal 2026 program. END [Copyright The Jiji Press, Ltd.]