Government ministries budget requests for 2025 fiscal year hit record $812 billion
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Loading... - Aoi Shimizu
- 05 Sep 2024
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Japan's government ministries have submitted a record budget request of 117.61 trillion yen (approximately $812 billion) for fiscal year 2025, marking the second consecutive year of record-high requests. The increase is driven by the nation's aging population, which is pushing up social security costs, and rising regional tensions that have led to increased defense spending.
Higher interest rates on government debt, following the Bank of Japan's shift towards tightening monetary policy, have further strained the country's already fragile fiscal health. The Finance Ministry is now tasked with reviewing these requests and trimming them down before finalizing the budget plan by the end of the year.
The government's target is to achieve a primary balance surplus in fiscal 2025, though many economists remain skeptical about this goal. The ruling Liberal Democratic Party's upcoming leadership race could also influence the final budget, particularly if the new leader decides to boost spending to counter inflation's impact on the economic recovery.
Significant portions of the budget requests include 28.91 trillion yen for debt-servicing costs, a 7% increase from the previous year, and a record 34 trillion yen from the Health, Labor, and Welfare Ministry to address the growing needs of Japan's aging population. The Defense Ministry has also requested over 8 trillion yen, its highest ever, to enhance security measures amid rising tensions in the Indo-Pacific region.
