TOKYO (Reuters) – Japan sees a combined budget request of over 110 trillion yen ($793 billion) from government ministries for a second consecutive fiscal year due to record defence spending and rising debt-servicing costs, local media reported on Wednesday.
Japan’s Ministry of Defence said it asked for a 3.6% increase in the annual budget to 5.6 trillion yen in a move to build military capacity, including plans to develop long-range missiles to counter threats from China and Russia.
The request will be approved by the government of Prime Minister Fumio Kishida at the end of the year when it will also unveil a major defence strategy overhaul and new midterm military buildup plan.
The finance ministry requested 26.9 trillion yen for debt servicing in the next fiscal year, marking a 10.9% increase from an initial debt-servicing budget for this year.
The ministry increased the assumed interest rate to 1.3% from 1.2% in the previous year, in its first assumed rate change since fiscal 2007/08.
The total budget request of over 110 trillion yen would be the second-largest after the 111.7 trillion yen record set in 2021, Japanese media reported, adding a natural increase in social security expenditure on the aging population was also among factors that boosted government spending.
However, since many budget items such as defence expenditure and measures to address inflation remain to be decided, the final spending for the fiscal year starting April 2023 would represent a record high for an 11th year, Jiji news agency said.
($1 = 138.7700 yen)
(Reporting by Kantaro Komiya; Editing by Bernadette Baum)