Japan's Budget Requests Hit Record 140 Trillion Yen, Debt Costs Soar

The Japanese government's budget requests have hit a record high of approximately 140 trillion yen ($877 billion) for fiscal 2027, according to an Asahi Shimbun tally. This surpasses the initial budget of 122.3 trillion yen for fiscal 2026.

Prime Minister Sanae Takaichi's administration has created a special investment framework aimed at raising Japan's potential growth rate through domestic investment. Under this framework, no spending caps were set, leading to increased requests from ministries and agencies.

The industry ministry requested 4.5 trillion yen for artificial intelligence, semiconductors, robotics, and other sectors, bringing its general-account budget request to about 4.98 trillion yen, more than 13 times its initial budget for fiscal 2026.

Debt service costs are also expected to soar, with the government allocating 36.6 trillion yen, up 5.3 trillion yen from the initial budget for fiscal 2026. The assumed interest rate used for budgeting purposes was raised to 3.8 percent, reflecting rising long-term interest rates.