Japan government approves record 122 trillion yen budget

TOKYO

The Japanese government on Dec. 26 approved a record budget for the upcoming fiscal year, to pay for everything from bigger defense spending to ballooning social security costs as inflation persists.

The 122.3-trillion-yen ($782 billion) budget for the fiscal year from April 2026 will include some 9 trillion yen for defense spending, as Prime Minister Sanae Takaichi aims to accelerate Tokyo's sweeping upgrade of its military in the face of worsening relations with China.

The 122-trillion-yen figure compares with the 115 trillion yen sought for the current fiscal year to March, which was also a record.

The expanding budget comes as the market worries about Takaichi's big spending policies adding to Japan's public debts.

Japan already has the biggest ratio of debt to GDP among major economies, projected to reach 232.7 percent this year, according to the International Monetary Fund.

Earlier this month parliament approved a massive extra budget, to pay for a 21.3-trillion-yen stimulus announced a month earlier.

The market has reacted by driving down the value of the yen while the benchmark yield rose for Japanese government bonds.

Takaichi has advocated big government spending to spur economic growth.

In an interview with the influential Nikkei business daily, Takaichi stressed her commitment to Tokyo's fiscal health, rejecting any "irresponsible bond issuance or tax cuts."