Japan Govt to Adopt Record 122.3-T.-Yen Budget Bill for FY 2026

Tokyo, Dec. 25 (Jiji Press)–The Japanese government is set to adopt on Friday a fiscal 2026 initial budget bill that features a record-high 122.3 trillion yen in general-account spending. The expenditures are set to exceed the previous record of 115,197.8 billion yen in the fiscal 2025 initial budget. Although tax revenue is expected to rise to an all-time high of around 83.7 trillion yen, this will not be enough to cover the higher spending. Japan plans to issue about 29.6 trillion yen in new government bonds to make up for the shortfall, up from 28,647.1 billion yen in the fiscal 2025 initial budget. It will be the first initial budget bill compiled under Prime Minister Sanae Takaichi. The government plans to submit the budget bill to the ordinary session of the Diet, Japan’s parliament, early next year and aims to pass it before the current fiscal year ends in March. “The draft budget makes considerations for fiscal discipline as it balances achieving a strong economy and the sustainability of government finances,” Takaichi told a joint meeting of the government and the ruling bloc on Thursday. Social security-related expenditures, which account for a significant portion of total spending, will rise to a record high of approximately 39.1 trillion yen, due to societal aging and the effects of inflation and wage increases. Regarding medical service fees, revised by the state every two years, the main portion primarily covering labor costs for medical workers will be raised by 3.09 pct, a significant increase from the 0.88 pct hike in the previous revision. Additionally, some 8.8 trillion yen has been earmarked for expenses linked to its defense buildup program, and about 20.9 trillion yen for distributions of tax revenues to local governments. Around 1 trillion yen will be set aside as reserve funds. Debt-servicing expenses, allocated for principal repayment and interest payments on government bonds, will also reach an all-time high, at roughly 31.3 trillion yen, up from the 28,217.9 billion yen in the fiscal 2025 budget. The assumed interest rate, used to estimate interest payment costs, will be hiked from 2.0 pct to 3.0 pct amid the recent climb in long-term interest rates. END [Copyright The Jiji Press, Ltd.]