Estimated bond issuance of about 29.6 trillion yen ($189.55 billion) for the 2026 budget would exceed the planned issuance of 28.6 trillion yen for the current budget year, the draft showed, confirming an earlier report by public broadcaster NHK.
The total size of next fiscal year’s budget is likely to be around 122.3 trillion yen, up from this year’s 115.2 trillion yen, a new record, the draft showed.
Tax revenues are likely to rise to about 83.7 trillion yen from an estimated 80.7 trillion yen in the current budget year, the draft shows. This is a record, but not enough to finance the rising costs for social security, defense and debt servicing.
The massive spending comes on top of a 21.3 trillion yen stimulus package put together in November and financed by a supplementary budget for the current fiscal year that aimed to cushion the blow to households from rising living costs.
Concerns about an oversupply of debt have pushed bond yields higher, with the 30-year bond yield rising 2.5 basis points to 3.45% on Wednesday, hitting another record high. Takaichi has stressed the need to focus on revitalizing the economy since taking office in October and has signaled a slowdown in the government’s goal of restoring Japan’s finances.
But her government has toned down talk of aggressive budget spending as bond yields rose.
In an interview with the Nikkei newspaper published on Tuesday, Takaichi said the government would not engage in “irresponsible” debt issuance or tax cuts. She also said that while Japan’s public debt-to-gross domestic product (GDP) ratio has shown a trend improvement, it remains high. ($1 = 156.1600 yen).
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