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Japan's Record $785 Billion Budget Faces Debt Challenges

12/29/2025

Center

Takaichi Approves Budget

On December 26, 2025, Prime Minister Sanae Takaichi's cabinet approved a record budget of $785 billion for the upcoming fiscal year.
The budget totals 122.3 trillion yen and seeks to balance policy with rising debt, bond issuance at 29.6 trillion yen, and debt-dependence at 24.2%.
Tax revenues are expected to rise 7.6% to 83.7 trillion yen, while debt-servicing costs rise 10.8% to 31.3 trillion yen, complicating Takaichi's stimulus plans.

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Koizumi Advocates Defense

Japan's Cabinet approved a defense budget exceeding 9 trillion yen for fiscal 2026, a 9.4% increase from the previous year.
The budget backs a five-year program to double military spending to 2% of GDP, pending parliamentary approval by March.
Defense Minister Shinjiro Koizumi called for enhanced capabilities, including long-range missiles and unmanned drones.
Japan plans to deploy Type-12 missiles by March and invest in the SHIELD surveillance system by 2028.

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Takaichi Approves Budget

On December 26, 2025, Prime Minister Sanae Takaichi's cabinet approved a record budget of $785 billion for the upcoming fiscal year.
The budget totals 122.3 trillion yen and seeks to balance policy with rising debt, bond issuance at 29.6 trillion yen, and debt-dependence at 24.2%.
Tax revenues are expected to rise 7.6% to 83.7 trillion yen, while debt-servicing costs rise 10.8% to 31.3 trillion yen, complicating Takaichi's stimulus plans.

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