Japan Launches JPY 114T Budget For next Fiscal Year

The lower house of Japan's parliament approved a record 114.4 trillion yen ($839.3 billion) budget for the next fiscal year, which begins in April, according to a ruling party lawmaker, putting further strain on the industrial world's heaviest debt burden.

The fiscal 2023 budget included record military and welfare spending to combat threats from mighty China and North Korea, as well as welfare spending to support an ageing population.

Despite the high level of public debt, Prime Minister Fumio Kishida's administration has already proposed doubling childcare spending to stem the declining birth rate, putting stretched finances under further strain.

The budget's passage in the powerful lower chamber almost guarantees its approval by the upper house by the end of the current fiscal year.

Long-term interest rates in Japan are rising, though they remain well below those in the United States and Europe, putting the BOJ's ability to keep borrowing costs low in a country accustomed to decades of near-zero inflation to the test.

Kishida's contentious plan to double Japan's defence spending to 2% of GDP by 2027 contributed to a record 6.8 trillion yen increase in spending.