Japan's Cabinet Approves Record FY2026 Budget Amid Debt Concerns

Japan's Cabinet has approved a record JPY 122.3 trillion (approximately $785 billion) budget for fiscal year 2026, marking the second consecutive year of increased spending. The budget includes record defense outlays, while the government aims to manage debt cautiously by reducing the debt dependence ratio despite a slight increase in new bond issuance.

• Japan's FY2026 budget sets a new record at JPY 122.3 trillion.
• Defense spending reaches a record 8.98 trillion yen to deter China.
• New bond issuance sees a modest increase, debt dependence ratio decreases.
• Debt-servicing costs climb to a record high due to rising interest rates.
• Budget includes measures for social security, education, and tech investments.
• Prime Minister Takaichi's administration aims for economic growth and fiscal sustainability.

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