Japan MOF Seeks Record ¥32.3 Trillion for FY2026 Debt Service

Japan’s Ministry of Finance plans to ask for a record ¥32.3 trillion ($220 billion) in debt-servicing costs in the fiscal-2026 budget, according to draft documents seen on 26 August. The total, driven by rising interest rates, exceeds the current year’s allocation by more than ¥4 trillion and includes ¥13.0 trillion for interest payments and ¥19.3 trillion for bond redemptions. The request underscores mounting fiscal pressure as other ministries seek larger appropriations. The Health, Labour and Welfare Ministry is asking for roughly ¥34.8 trillion, its largest ever, to cover swelling social-security expenses linked to population aging. The Land, Infrastructure, Transport and Tourism Ministry has outlined a ¥7.08 trillion package—up 19%—with about ¥1 trillion earmarked for repairing aging sewers, tunnels and airports after a fatal sinkhole accident in Saitama Prefecture earlier this year. The newly created Children and Families Agency seeks ¥7.42 trillion to expand childcare and fertility-support programs, while the Economy, Trade and Industry Ministry wants ¥2.04 trillion, about 20% more than the current year, to fund energy-transition and semiconductor initiatives. Finance Minister Michio Kato told reporters that no revenue from a proposed new tax is assumed in the draft and that a “permanent funding source” will be required if parliament proceeds with plans to abolish the gasoline surcharge tax. He said ruling and opposition parties are expected to intensify talks on how to offset any shortfall. Under Japan’s budget timetable, ministries must submit their requests by the end of August. The Cabinet will refine the figures in the autumn and aim to present a full fiscal-2026 draft to parliament by year-end.