Japanese ministries have submitted record budget requests for the next fiscal year, according to Zhitong Finance. The news comes just as the benchmark 10-year Japanese government bond yield touched 3% for the first time since 1996, putting added focus on Prime Minister Takaichi Sanae's fiscal ambitions.
Requests Reach Around 143 Trillion Yen
A media tally of submissions from 18 ministries and agencies put total budget requests at roughly 143 trillion yen. The Ministry of Economy, Trade and Industry asked for more than five times the amount from the same period a year earlier. The ministries in charge of defense and social security also filed record requests.
10-Year Yield Hits 3%
With the record requests now on the table, markets are waiting to see how much the Takaichi administration intends to spend and how it plans to fund the outlays. Concerns about Japan's fiscal outlook have been one of the factors weighing on the bond market. The benchmark 10-year JGB yield rose to 3% on Tuesday, a level not seen since 1996.
A Shift Away From Supplementary Budgets?
Growth Strategy Minister Jonai Makoto tried to supply context for the record requests that morning. He said Takaichi is changing the way Japan formulates its budget. Traditionally, Japan has leaned heavily on supplementary budgets to add extra spending on top of its annual initial budget.
"Given Prime Minister Takaichi's policy of moving away from reliance on supplementary budgets, I believe the FY2027 budget requests should be compared with the combined size of the FY2025 supplementary budget and the FY2026 initial budget," Jonai told reporters.