Archive · 26 Dec 2025
Japan Approves Record Defence Budget Amid Inflation Concerns
Japan has approved a very big budget for next year.
This budget is the largest ever and includes a lot of money for the military to protect the country.
The government is also trying to control how much debt they take on.
At the same time, Japan is dealing with rising prices, which is making it harder for people to afford things.
The central bank is raising interest rates to try to control these prices.
Japan is also facing tensions with China, which is why they are spending more on defence.
The budget aims to make the economy stronger while being careful with money.
Japan's cabinet approved a record 122.3-trillion-yen budget for fiscal 2026, with 9 trillion yen allocated for defence, marking a 9.4% increase from 2025.
The budget caps new bond issuance below 30 trillion yen, reducing the debt dependence ratio to 24.2%, the lowest since 1998.
Core inflation in Tokyo remained above the Bank of Japan's 2% target, prompting the BOJ to raise interest rates to a 30-year high of 0.75%.
Japan's defence budget includes 100 billion yen for unmanned drones and focuses on enhancing defensive capabilities amid escalating tensions with China.
The budget aims to boost the economy while maintaining fiscal discipline, addressing market concerns about Japan's heavy debt burden.
- Who
- Japan, China, US, Britain, Italy, Australia
- What
- Japan approves record defence budget and draft national budget
- When
- Fiscal year starting April 2024
- Where
- Japan
- Why
- To boost economy, curb debt, and strengthen defence against China
- Total Budget
- 122.3 trillion yen (USD 783 billion)
- Defence Budget
- 9 trillion yen (USD 60 billion)
- Defence Budget Increase
- 9.4% from 2025
- Bond Issuance Cap
- Below 30 trillion yen (USD 190 billion)
- Debt Dependence Ratio
- 24.2% (lowest since 1998)
- Tokyo Core CPI
- 2.3% in December (down from 2.8% in November)
- BOJ Policy Rate
- 0.75% (30-year high)
- Factory Output Change
- -2.6% in November
