Image Credits : Japan News. Yomiuri
Japan’s budget demands have surged to an unprecedented level, surpassing $800 billion for the next fiscal year, according to a statement released by the Finance Ministry on Wednesday. The record-setting budget request underscores the mounting fiscal pressures facing the world’s third-largest economy as it grapples with an ageing population, rising social security costs, and increased defence spending.
The Finance Ministry revealed that the total budget requests from various government ministries and agencies for the fiscal year starting in April 2025 have reached approximately ¥110 trillion ($802 billion). This marks a significant increase from the previous year’s requests, driven largely by escalating costs in social welfare and national defence.
Additionally, Japan’s government has prioritized strengthening its defence capabilities amid growing regional tensions, particularly with North Korea and China. The defence ministry has requested a record ¥7.3 trillion ($53.3 billion) for the upcoming fiscal year, marking a significant increase aimed at enhancing missile defence systems, cybersecurity, and other critical military capabilities.
Finance Minister Shunichi Suzuki acknowledged the challenges posed by the expanding budget demands but emphasized the need for fiscal discipline. The record budget demands come at a time when Japan is still recovering from the economic impacts of the COVID-19 pandemic.
Although the economy has shown signs of recovery, the government’s debt-to-GDP ratio remains the highest among developed nations, exceeding 260%. This has raised concerns about Japan’s ability to manage its long-term fiscal sustainability. Economists warn that without significant reforms, Japan could face difficulties in balancing its budget and managing its growing debt burden.