The Japanese government approved a record 115.54 trillion yen ($730 billion) initial budget for fiscal 2025, driven by rising social security and defense spending, raising concerns about fiscal health.
Prime Minister Shigeru Ishiba, after a shocking election loss in October, emphasized the need for swift budget approval to support the economy and restore fiscal stability.
The budget includes a record 38.28 trillion yen for social security costs, addressing the aging population and declining birthrate, and 8.70 trillion yen for defense, marking the 13th consecutive increase. The defense budget focuses on regional threats and long-range missile production.
Tax revenue is projected at a record 78.44 trillion yen, with new bonds worth 28.65 trillion yen issued, covering a quarter of expenditures. Despite falling below 30 trillion yen for the first time in 17 years, the government remains heavily reliant on debt.
Debt-servicing costs reached 28.22 trillion yen due to rising interest rates, and Japan’s total outstanding bonds are expected to exceed twice the GDP by the end of fiscal 2025.
The Cabinet Office projects 1.2% economic growth in fiscal 2025, supported by higher tax revenue amid rising prices.
