Japan Approves Record Budget to Fast-Track Defense Buildup as Government Pledges Debt Discipline

Overview

• Cabinet approval covers a ¥122.3 trillion (about $784 billion) preliminary FY2026 budget, up 9.4% from 2025 and designed to hit defense outlays of roughly 2% of GDP by March.
• More than ¥970 billion is earmarked for long‑range standoff missiles, including ¥177 billion for Type‑12 anti‑ship missiles with the first deployment slated for Kumamoto by March 2026, a year ahead of schedule.
• ¥100 billion launches the SHIELD program to field large numbers of aerial, surface and undersea drones by March 2028, and officials say Japan may initially import systems, possibly from Turkey or Israel.
• Over ¥160 billion funds joint development of a next‑generation fighter with the UK and Italy targeting deployment in the mid‑2030s, alongside support for the domestic defense industrial base.
• The fiscal plan relies on only a slight rise in new bond issuance ($189 billion) and a record tax‑revenue forecast ($535 billion) as debt‑service costs increase 10.8% to about $200 billion, with the package now headed to parliament for approval.