Japan Caps Bond Issuance at $251 Billion Amid Record Budget Requests

Japan's government plans to cap new bond issuance at around 40 trillion yen ($251 billion) for the fiscal 2027 budget. This decision comes as budget requests from ministries and agencies for the next fiscal year are expected to surpass 130 trillion yen, marking a record high for the fourth consecutive year.

According to Prime Minister Sanae Takaichi, the government intends to incorporate spending into the initial budget that in recent years was often financed through supplementary budgets. This move could increase the headline expenditure in the initial budget.

Takaichi pointed out that higher tax revenues partially offset the extra costs of an extraordinary budget during fiscal 2025, allowing new bond issuance to stay below the previous year's level at about 40 trillion yen. She indicated that the same approach would be maintained going forward.