Japan's government is expected to request a budget exceeding 130 trillion yen (approximately $1.13 trillion) for the 2027 fiscal year, marking the first time this threshold has been surpassed. The increase is driven by expanded investments in new growth sectors, increased defense spending, and rising interest burdens on national debt, suggesting a fourth consecutive year of record-high budget requests.
According to Yonhap News, citing Kyodo News, the budget requests from various Japanese government ministries for the 2027 fiscal year are anticipated to exceed 130 trillion yen. The previous year's request for the 2026 fiscal year was 122 trillion yen (about $1.07 trillion).
The increase in requests is influenced by the government's decision to effectively remove caps on investments in new growth sectors. Support for advanced industries such as artificial intelligence (AI) and semiconductors, along with spending to enhance defense capabilities, is being expanded simultaneously.
The Ministry of Economy, Trade and Industry has requested 7.7 trillion yen (approximately $67 billion), with about 4.5 trillion yen (around $39 billion) allocated specifically for AI and semiconductor development.
This aligns with the government's ongoing mid- to long-term policy to foster advanced industries. Under the 'AI and Semiconductor Industry Foundation Strengthening Framework' established in November 2024, the government plans to inject over 10 trillion yen in public support over seven years until the 2030 fiscal year, aiming to attract more than 50 trillion yen in private and public investments over the next decade. The projected economic ripple effect is estimated at around 160 trillion yen.
The Ministry of Defense has also requested a record budget of approximately 8.9 trillion yen (about $78 billion) for the deployment of intercept drones and other initiatives.
As spending increases, the financial burden is also growing. Japan's national debt for the 2026 fiscal year is projected to reach 31.2758 trillion yen, an increase of 3.0579 trillion yen from the previous year. According to the Ministry of Finance's estimates for the following year, interest payments are expected to rise from about 13 trillion yen in 2026 to between 15.4 trillion and 15.5 trillion yen in 2027.
With long-term government bond rates on the rise, the future burden of interest payments is likely to become a significant variable in budget management.
Additionally, there are many 'item requests' related to defense spending that do not specify concrete amounts at this stage, which could lead to an increase in the final budget request.
Finance Minister Satsuki Katayama indicated a commitment to active fiscal spending, stating, "There is no longer anything that can be called a 'ceiling' on spending," according to Kyodo News.
The Japanese government plans to compile budget requests from various ministries by the end of this month, followed by a review by the Ministry of Finance before the budget proposal is finalized in the Cabinet.
* This article has been translated by AI.
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