Japan’s Budget Proposal for Fiscal 2026: General Account to Hit Record ¥122 Trillion

The Yomiuri Shimbun

14:27 JST, December 23, 2025

The government is making final arrangements for a total of about ¥122 trillion in the general account for the fiscal 2026 budget proposal, and the Cabinet will approve the budget draft on Friday at the earliest, according to sources familiar with the issue.

The amount is much larger than the roughly ¥115.2 trillion in the initial budget proposal for fiscal 2025 and will be the highest on record for the second consecutive year.

On Monday, Prime Minister Sanae Takaichi and Finance Minister Satsuki Katayama held talks on the budget draft at the Prime Minister’s Office.

After the meeting, Katayama told reporters: “At a time when the nation has almost exited from deflation and there is an inflationary trend, it is not usual for the government budget to decrease. It is only natural that the amount would be the highest ever.”

In expenditures, it is likely that about ¥39 trillion will be allocated to social security affairs because of upward revisions of medical treatment fees, and about ¥8.8 trillion to finance spending in the defense buildup program.

The distribution of local allocation tax will be around ¥21 trillion which is larger than the about ¥18.9 trillion in fiscal 2025. The reserve in the budget will amount to around ¥1 trillion.

On the other hand, the government plans to earmark about ¥31 trillion for costs related to government bonds, which is spent on redeeming bonds and paying interest on them. The amount will exceed the current record high of about ¥28.22 trillion in the initial budget proposal for fiscal 2025.

The increase is mainly because assumed interest rates at the time of calculating interest payments are rising.

In revenues, the government expects that the amount of tax revenue will increase to about ¥84 trillion from about ¥77.82 trillion in the initial budget of fiscal 2025.

Strong corporate earnings and inflation are expected to push up the tax revenue amount.

In consideration of fiscal sustainability, the government aims to cap the issuance of new government bonds to under ¥30 trillion.