Japanese Ministries Request Record 143.1 Trillion Yen Budget

Japanese government agencies have submitted record budget requests totaling 143.1 trillion yen ($917.78 billion) for the fiscal year starting in April. This figure represents a significant increase over the previous year's 122 trillion yen, reaching spending levels last seen during the COVID-19 pandemic.

Satsuki Katayama, the Finance Minister, characterized the effective increase as approximately 2.5 trillion yen, or 1.8%. She explained that the higher total reflects a fundamental reform initiated by Prime Minister Sanae Takaichi to combine initial and supplementary budgets for greater transparency. The requests include record allocations for defense, welfare, and a 12.2 trillion yen investment program targeting semiconductors, artificial intelligence, and economic security.

The spending surge occurs as Japan faces fiscal sustainability challenges. The 10-year government bond yield recently hit 3% for the first time since 1996, pushing debt-servicing costs to a record 36.64 trillion yen. In response, Prime Minister Takaichi has signaled a goal to limit new bond issuance to below 40 trillion yen while pursuing a 370 trillion yen growth strategy.

Minister Katayama denied reports that U.S. Treasury Secretary Scott Bessent pressured Japan to raise interest rates, stating that Bessent responded positively to Japan's strategy during a Group of 20 meeting. The Ministry of Finance will now scrutinize the requests to ensure cost-effectiveness before finalizing the proposal at year-end.