Overview
- Total spending is set at ¥122.31 trillion, including a record ¥9.04 trillion for defense and ¥39.06 trillion for social welfare.
- The government plans ¥29.58 trillion in new bond issuance, while debt-service costs rise to about ¥31.28 trillion using a higher 3.0% assumed interest rate.
- The defense plan advances the 2% of GDP target and funds standoff missiles, early Type-12 deployments by March in Kumamoto, hypersonic weapons, and the SHIELD coastal drone system slated for 2028.
- Tax revenue is projected at a record ¥83.74 trillion, but market concern over fiscal sustainability has coincided with a weaker yen and higher long-term yields after BOJ policy normalization.
- With no majority in the Upper House, the ruling bloc is courting the Democratic Party for the People, which seeks a higher nontaxable income threshold in exchange for support.