TOKYO - Budget requests by Japanese ministries for fiscal 2027 totaled 143 trillion yen ($918 billion), marking a record high for the fourth consecutive year, partly due to 12 trillion yen in requests under a new uncapped special investment category, the Finance Ministry said Friday.
The category was created to advance Prime Minister Sanae Takaichi's signature "responsible and proactive" fiscal policy agenda, while financial markets remain wary of her government's expanding fiscal commitments.
Japan's fiscal health is already the worst among major advanced economies, and rising interest rates are increasing the cost of servicing it after years of low rates.
The 143.07 trillion yen request was sharply higher than the 122.3 trillion yen initial budget for fiscal 2026, partly because the government is seeking to shift spending long funded through supplementary budgets into the initial budget.
The total is more than 2 trillion yen higher than the combined 140.6 trillion yen in the supplementary budget for fiscal 2025 and the initial budget for fiscal 2026.
Debt-servicing costs are also at a record 36.64 trillion yen, with the assumed interest rate used to calculate payments raised to 3.8 percent from 3.0 percent in the fiscal 2026 budget.
The Health, Labor and Welfare Ministry submitted the largest request at 36.58 trillion yen, reflecting rising pension, health care and nursing-care costs as Japan's population ages.
The Internal Affairs and Communications Ministry sought 21.92 trillion yen, most of it for grants to help local governments cover funding shortfalls.
The Defense Ministry requested 8.84 trillion yen, including funds to develop attack drones as Japan strengthens its counterstrike capabilities.
The Ministry of Economy, Trade and Industry sought 5.70 trillion yen, including 4.53 trillion yen under the investment category for artificial intelligence, semiconductors and other sectors aimed at spurring private investment.
Many ministries also submitted "itemized requests" without specifying amounts, raising the possibility that the final budget could grow further.
The draft budget is expected to be finalized by the Cabinet by the end of the year. The government plans to submit the budget bill during next year's regular parliamentary session and aims to secure its passage by the end of March.
