On the 23rd, the government made a cabinet decision on the initial budget bill for next fiscal year, which will be the largest ever, with the total amount of the general account exceeding 114 trillion yen.
With the issuance of new government bonds accounting for more than 30% of the government's annual revenue, the government continues to rely on government bonds, and as defense spending is expected to increase, securing stable financial resources will become an issue.
The budget for next fiscal year, which was decided by the government at an extraordinary cabinet meeting on the 23rd, reached a total of 114.3812 trillion yen in the general account, surpassing 110 trillion yen for the first time, setting a record high for the 11th consecutive year.
Combined with future maintenance funds, the "defense budget" exceeded 10 trillion yen, making it the third largest after "social security costs" and "local allocation tax grants."
On the other hand, although the amount of new government bonds issued was 35.623 trillion yen, which is about 1.3 trillion yen less than this year, the government continues to face a severe financial situation, relying on government bonds for 31.1% of its revenue.
The government will use financial surpluses and non-tax revenues as a measure to secure financial resources to raise the defense-related budget to 2% of GDP (gross domestic product) in FY2027. The plan is to cover the funds with tax increases such as corporate tax.
However, the specifics of the expenditure reform are a matter for future consideration, and discussions on when the tax increase will begin have been postponed until next year or later.
As spending pressure is expected to increase in fields other than defense, the question is how to secure stable financial resources.