Japan Cabinet Clears Record Budget, Pledges Debt Control
Japan’s Cabinet has approved a record national budget of about 122.3 trillion yen, or roughly $785 billion, for the next fiscal year, marking the largest spending plan in the country’s history. The budget, which will be submitted to Parliament for approval, reflects the government’s attempt to support economic growth while maintaining discipline over public finances.
Spending Priorities
The new budget increases allocations for social security, defence, and measures to support households and businesses amid rising costs. Social welfare spending continues to rise due to Japan’s ageing population, while defence outlays remain elevated as part of efforts to strengthen national security. The plan also includes funding for infrastructure and economic resilience, aimed at sustaining domestic demand.
Focus on Debt Management
Despite the higher overall spending, the government has reiterated its commitment to keeping debt under control. Officials said new government bond issuance would be restrained, with an emphasis on higher tax revenues to fund spending. Japan carries one of the world’s highest public debt burdens, exceeding twice the size of its economy, making debt management a key policy challenge. Rising interest rates have also increased debt servicing costs, adding pressure to fiscal planning.
Economic and Policy Outlook
The government said the budget seeks to strike a balance between supporting growth and ensuring fiscal sustainability. Economists note that while the record size underscores continued reliance on public spending, efforts to limit additional borrowing signal caution. The final shape of the budget will depend on parliamentary deliberations, with markets closely watching how Japan manages its long-term fiscal risks alongside near-term economic needs.
