Japan’s record military spending request set to boost budget
By Tetsushi Kajimoto
TOKYO (Reuters) -Japan’s government ministries have made budget requests totalling $784 billion for the next fiscal year – their second-largest total to date, driven largely by the defense ministry’s request for a rise in spending to record levels.
The combined total spending requests made for next year’s budget came to 110.05 trillion yen, the Finance Ministry said on Monday, not far off requests for this financial year that came in at 111.7 trillion yen.
This fiscal year’s initial budget has ended up being trimmed to 107 trillion yen, still a record amount.
The budget may be inflated further as some items were requested without an amount being specified in areas such as defense and decarbonisation.
“Spending pressure appears to be strong. Large-scale spending looks set to continue for a while given investment in defense and decarbonisation,” said Takuya Hoshino, senior economist at Dai-ichi Life Research Institute.
“The government has no choice but to sell more bonds for the time being, which must be repaid by sales tax hikes in future.”
In a rare step, the government has included measures to respond to currency moves as items for consideration, as the yen’s slide to a 24-year low beyond 140 to the dollar has stoked policymakers’ concerns about rising living costs.
If next year’s budget does exceed this year’s, it would be the 11th year in a row of record budgets.
The requests will be reviewed by the finance ministry by December, when the government compiles a draft of next fiscal year’s budget.
The ministries have requested a combined 4.3 trillion yen for growth areas under Prime Minister Fumio Kishida’s “new capitalism” goal targeting an ecological and digital transformation.
The defense ministry has requested a record 5.6 trillion yen to spend, planning to develop and mass produce a cruise missile and a high-velocity ballistic missile as part of the country’s preparations to counter threats from China and Russia.
Money for social security and debt-servicing made up more than half of the budget requests. Japan has the industrial world’s heaviest debt load at more than double the size of the economy.
($1 = 140.35 yen)
(Reporting by Tetsushi Kajimoto; Editing by Edwina Gibbs and Hugh Lawson)