Approximately nine trillion yen of the budget is earmarked for defense, as Prime Minister Sanae Takaichi pushes to accelerate Japan’s military modernization amid rising tensions with China, News.Az reports, citing foreign media.
The defense ministry described the current security environment as “the most severe and complex since the end of the war” and emphasized the need to strengthen capabilities.
A key project is the SHIELD coastal defense system—Synchronised, Hybrid, Integrated and Enhanced Littoral Defence—planned to use drones to protect Japan’s coastline, with completion targeted for March 2028. Specific locations for deployment have not been disclosed.
The new budget exceeds the 115 trillion yen sought for the current fiscal year, which was also a record. Markets have expressed concern over Japan’s growing debt, which is already the highest among major economies, projected at 232.7% of GDP this year according to the IMF.
Earlier this month, parliament approved a 21.3-trillion-yen stimulus within a supplementary budget, which contributed to market jitters, weakening the yen and pushing Japanese government bond yields higher. Some analysts have compared the situation to the UK’s 2022 bond market turmoil.
Takaichi has defended her government’s approach, advocating proactive fiscal policies to bolster national strength rather than imposing austerity. She emphasized fiscal responsibility, rejecting “irresponsible bond issuance or tax cuts,” while stressing the need to support Japan’s economy amid inflation and an ageing population.
The draft budget now awaits parliamentary approval.
