Japan gov't adopts record 122.3 trln yen draft budget for fiscal 2026

TOKYO, Dec. 26 (Xinhua) -- Japan's Cabinet on Friday approved a draft budget worth about 122.3 trillion yen (about 785 billion U.S. dollars) for the next fiscal year starting April, local media reported.

The huge spending, the first full-scale budget under Prime Minister Sanae Takaichi, marks a record high for the second straight year following the fiscal 2025 initial budget at about 115.2 trillion yen.

Takaichi's aggressive spending policy has pressured the yen against major currencies in the foreign exchange market, which is a negative sign for a country that relies heavily on imported energy sources, Kyodo News reported.

Under the draft budget for fiscal 2026, new government bond issuance is set at about 29.6 trillion yen to cover a revenue shortfall, underscoring Japan's heavy dependence on debt and fueling concerns about a further strain on the state's fiscal health, which is the worst among major economies, the report said.

The government expects to collect a record 83.7 trillion yen in tax revenue, marking a record high for the seventh consecutive year.

A record 9.04 trillion yen has been earmarked for defense-related purposes, while 39.06 trillion yen has been set aside for social welfare, which typically accounts for the largest share of Japan's national budget.

The government plans to submit the budget plan to the Diet, the country's parliament, in January, aiming to pass it by the end of fiscal 2025. ■