Japan's fiscal 2026 budget to include record spending, sources say

Total spending in Japan's draft budget for fiscal 2026 will likely exceed 120 trillion yen ($775 billion) to hit a new record, two government sources familiar with the matter said on Tuesday.

It would top the 115-trillion-yen annual budget for the current fiscal year, the sources said, confirming an earlier report by Kyodo news agency. The sources spoke on condition of anonymity as they were not authorised to speak publicly.

The increase would reflect rising social welfare costs, which make up one-third of total spending, defence spending and the cost of funding Japan's huge public debt, they added.

Concern over Prime Minister Sanae Takaichi's big spending plans has recently pushed up government bond yields as investors brace for issuance of huge debt.

-Takaya Yamaguchi/Reuters