日本财务省公布各省2027财年概算要求总额143.1万亿日元（约9080亿美元）创纪录，防务等大额项目仍未定、年末才定案

Japanese ministries requested substantially more spending for next fiscal year, with some major items still unresolved and investors focused on how large the final budget will become, and how the government will pay for it.

Ministries sought ¥143.1 trillion ($908 billion) in total for the fiscal year starting in April, the Finance Ministry said Friday. That topped last year’s ¥122 trillion in requests. It also exceeded ¥140.6 trillion, the combined size of this year’s ¥122 trillion initial budget and last year’s ¥18.3 trillion extra budget — a comparison cited by the ministry as the most apt given changes to the budgeting process.

The MOF will scrutinize the requests before the government finalizes its budget proposal at year-end.

The larger requests partly reflect Prime Minister Sanae Takaichi’s overhaul of the budgeting process, which aims to combine spending traditionally funded through supplementary budgets with the allocations in the initial full-year budget. Japan has compiled extra budgets almost every year for eight decades, a practice Takaichi has criticized as lacking transparency.

Under the new approach, several ministries, including defense, economy and welfare, sought record allocations.

The initial budget will be a key test of Takaichi’s fiscal stance. Investors have become increasingly sensitive to Tokyo’s fiscal outlook as the premier rolls out costly initiatives, including a ¥370 trillion growth strategy and a temporary cut to the tax on food purchases. The premier hasn’t fully spelled out how the measures will be funded.

Fiscal concerns have been among the factors weighing on the bond market, with the benchmark 10-year yield reaching 3% earlier this week for the first time in three decades. Higher yields have pushed up the government’s borrowing costs, prompting the Finance Ministry to request record debt-servicing spending for next fiscal year.

Against that backdrop, Takaichi is trying to balance her pro-growth agenda with the need to reassure markets. Her cabinet members, including Finance Minister Satsuki Katayama and Growth Strategy Minister Minoru Kiuchi, have repeatedly stressed that the government will pursue economic growth while maintaining fiscal sustainability.

How markets ultimately assess the budget will likely depend heavily on where spending settles after the year-end review. The current requests include substantial unresolved items, with defense among the biggest potential sources of additional spending.

The government plans to revise Japan’s three key security documents by year-end, including its five-year defense buildup program. The current framework targets defense-related spending of about 2% of 2022 GDP, but discussions could include using a larger, more recent GDP base or eventually raising the target to around 3.5%. Either move could add to the Defense Ministry’s already record request.

The ¥143.1 trillion figure is far from settled. Unspecified defense spending could push the eventual total higher, while some of the roughly ¥12 trillion requested through Takaichi’s new multi-year growth account may be pared back or shifted elsewhere during negotiations. While Takaichi has pledged to reduce reliance on extra budgets, Japan remains exposed to unexpected spending needs stemming from developments such as the Middle East conflict and natural disasters.

Another key question for investors is how the spending will be funded. Takaichi said in an interview with the Yomiuri newspaper last week that she wants to keep new bond issuance below ¥40 trillion, signaling an effort to reassure investors that higher spending will not lead to an unchecked increase in borrowing.

The Cabinet Office earlier projected in its fiscal outlook that an additional ¥10 trillion in annual spending would not increase the debt-to-GDP ratio as long as Japan maintains sufficient economic growth.

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