Tokyo – The Japanese government has approved a record budget for the upcoming fiscal year, exceeding 122.3 trillion yen (approximately $784.6 billion USD). This move comes as Japan navigates balancing fiscal stimulus with concerns over rising debt, while simultaneously increasing defense spending to address escalating security challenges in the region.
The budget, set to commence in April 2026 and be presented to parliament early next year, is the largest in Japan’s history, surpassing the current year’s budget of 115.2 trillion yen. A significant portion of this increase is allocated to defense.
Specifically, the government has approved a record defense budget exceeding 9 trillion yen (approximately $58 billion USD). This represents a 9.4% increase compared to the previous year, aligning with a five-year program aimed at doubling military spending to 2% of the nation’s GDP. This marks a considerable shift in Japan’s defense posture.
The plan includes allocating over 970 billion yen to enhance long-range missile capabilities. This includes the acquisition of domestically developed Type-12 missiles, boasting a range of approximately 1,000 kilometers. Further investments will be made in bolstering unmanned aerial vehicle (UAV) capabilities and coastal defense systems. These investments underscore Japan’s commitment to strengthening its defense capabilities.
These measures are being implemented against a backdrop of rising regional tensions, particularly with China, which Japan’s 2022 national security strategy identifies as the country’s “greatest strategic challenge.” Prime Minister Sanae Takaichi’s government has pledged to enhance both the defensive and offensive roles of Japan’s Self-Defense Forces within its security alliance with the United States.
Japan, which already possesses one of the highest debt-to-GDP ratios among developed nations, faces additional challenges with rising borrowing costs. This is particularly relevant following the Bank of Japan’s recent shift away from its ultra-loose monetary policy, and the projected interest rate increase to 3%, the highest level in approximately 29 years. The record budget and increased defense spending signal a significant policy shift for Japan.
