ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon Print

Japan FY 2023 budget requests hit 2nd highest at $784bn

Defense spending expected to rise to record as Tokyo revises national strategy

Japan's finance ministry says budgetary requests from government departments reached the second-largest on record at 110.05 trillion yen ($784 billion) for the fiscal year from next April.

TOKYO (Kyodo) -- Budgetary requests by Japanese government offices totaled 110.05 trillion yen ($784 billion) for the fiscal year from next April, the second-largest on record, the Finance Ministry said Monday amid record defense spending and swelling social security costs.

The general-account initial budget for fiscal 2023 to be compiled based on the requests will likely exceed the 107.60 trillion yen for the current fiscal year. It will also cover spending on measures to help ease the economic impact of accelerating inflation.

The total amount of requests may expand after some modifications. The ministry plans to draft the budget in December before parliament starts deliberations on it early next year.

The amount requested by the end-of-August deadline compares with the 111.66 trillion yen sought for fiscal 2022, a record high. The latest figure marked the first fall in five years.

Some requests included items with unspecified amounts, meaning that details have yet to be hashed out, and the defense budget is the most notable example.

The Defense Ministry requested a record 5.56 trillion yen, up from the previous year's 5.37 trillion yen, or about 1 percent of Japan's gross domestic product.

The defense budget could finally top 6 trillion yen as the government considers reinforcing the country's defense posture. Work on revising the existing national security strategy and key defense documents is expected to be completed by year-end.

To help ease the pain of rising energy and food prices, the government has taken relief measures. Prime Minister Fumio Kishida has instructed officials to draw up additional steps by early September, saying he will first tap reserve funds for the current year.

Given that Japan's fiscal health is the worst among developed nations, the Finance Ministry will try to curb spending as much as possible in drawing up a budget plan in December, but the task is seen as all the more difficult.

The largest budgetary request was made by the health ministry, which asked for 33.26 trillion yen due to ballooning pension payments and medical costs in a rapidly aging society.

Despite the country's massive debt -- more than twice the size of its economy -- low interest rates in Japan have helped limit debt-servicing costs. Still, the Finance Ministry requested 26.99 trillion yen for debt-servicing costs, up from 24.34 trillion yen in the fiscal 2022 initial budget.

Under the Bank of Japan's yield-curve control program, short-term and long-term interest rates have been depressed at rock-bottom levels. The central bank has vowed to maintain the scheme even as its U.S. and European peers raise interest rates to combat inflation.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

Discover the all new Nikkei Asia app

  • Take your reading anywhere with offline reading functions
  • Never miss a story with breaking news alerts
  • Customize your reading experience

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more