Quick Read
- Japan’s parliament approved a record 122.31 trillion yen budget for the fiscal year ending March 2027.
- The budget includes significant investments in AI and semiconductors, as well as a record defense allocation.
- Opposition lawmakers are calling for a supplementary budget due to concerns over the economic impact of global conflicts and rising oil prices.
TOKYO (Azat TV) – Japan’s parliament has approved a record 122.31 trillion yen ($767 billion) budget for the fiscal year ending March 2027, marking the first time in 11 years the budget was enacted after the official start of the fiscal year on April 1. The budget, championed by Prime Minister Sanae Takaichi’s Cabinet, represents a significant expansionary fiscal stance with substantial investments in strategic sectors like semiconductors and artificial intelligence. However, its passage was delayed, and it faces scrutiny for its lack of concrete measures to mitigate the economic impacts of the ongoing U.S.-Israeli war against Iran and surging crude oil prices.
Record Budget Amidst International Crises
The approved budget totals a record 122.31 trillion yen, with approximately $767 billion allocated for the fiscal year. This marks the second consecutive year of record-high budgets under Prime Minister Takaichi’s administration, reflecting an aggressive investment strategy in key technological areas. Significant portions are earmarked for social security, including over $240 billion, and defense, with a record 9.04 trillion yen allocated for defense-related purposes. Despite revenue growth, the government plans to issue 29.58 trillion yen in new bonds to cover a shortfall, highlighting Japan’s substantial reliance on debt.
Opposition Calls for Supplementary Measures
Opposition lawmakers have voiced concerns that the budget lacks sufficient measures to cushion the potential economic fallout from the war in Iran and rising oil prices. They have already called for the government to consider drafting a supplementary budget to address these issues. In response to the crisis, the government did resume gasoline subsidies in mid-March, curbing pump price increases by utilizing the fiscal 2025 reserve fund. However, Finance Minister Satsuki Katayama stated that it is premature to predict the full impact of the Middle East situation or to craft a supplementary budget at this stage. The government has not ruled out using up to 1 trillion yen from reserves allocated in the fiscal 2026 budget, but these funds are primarily designated for emergency response to natural disasters.
Budget Passage Delays and Political Maneuvers
The budget’s approval process was complicated by a snap election called by Prime Minister Takaichi in January, which delayed deliberations on the fiscal 2026 draft budget by approximately one month. Although the ruling Liberal Democratic Party (LDP) secured a supermajority in the lower House of Representatives, allowing the initial draft to pass quickly on March 13, the ruling coalition faced opposition in the 248-member House of Councillors. The opposition slowed down deliberations, preventing the budget from being enacted by the April 1 start of the fiscal year. This led to the enactment of an 8.56 trillion yen stopgap budget on March 30 to fund government operations for 11 days from April 1, the first such provisional budget since 2015. The stopgap measure has since been absorbed into the main fiscal 2026 budget. According to constitutional stipulations, a budget automatically becomes law if the upper house fails to vote on it within 30 days of receiving it from the lower house, a deadline that would have been April 11 in this case.
The record-breaking budget, passed amidst significant global instability, underscores Japan’s commitment to bolstering its economy and defense capabilities, even as domestic political processes led to delays and ongoing debates about fiscal resilience in the face of international crises.