General-account budget requests by Japan's ministries and agencies for fiscal 2023 totaled over 110 trillion yen ($790 billion), with defense spending likely to hit a record high, a Kyodo News tally found Wednesday.
The requests for the year starting in April marked the first drop in five years from a record 111.66 trillion yen sought for fiscal 2022, but they are set to increase further due to additional costs to address higher commodity prices and the COVID-19 pandemic.
The size of the initial budget could end up surpassing the previous year's 107.60 trillion yen, given swelling social security costs on the back of the country's graying population and rising debt-servicing outlays.
After assessing the requests, the Finance Ministry will compile the initial draft budget in December before Diet deliberations.
Japan is likely to issue government bonds to make up for chronic tax revenue shortfalls, raising concern about the nation's fiscal health, which is the worst among major economies with a public debt twice the size of its gross domestic product.
Amid growing security threats from China, Russia and North Korea, the Defense Ministry requested 5.59 trillion yen, the largest amount ever and up from 5.45 trillion yen the previous year, with the outlay possibly increasing to around 6.5 trillion yen as the requests included some 100 items that do not indicate specific sums.
The expected increase in the defense budget comes after Prime Minister Fumio Kishida vowed to "fundamentally reinforce" defense capabilities by realizing a "substantial increase" in defense spending, as the global security environment has been rapidly deteriorating since Russia began invading Ukraine in February.
Kishida has repeatedly stressed that "Ukraine today may be East Asia tomorrow," in an apparent reference to China's territorial ambitions with regard to the self-ruled island of Taiwan and the Tokyo-controlled, Beijing-claimed Senkaku Islands in the East China Sea.
Among the some 100 items are developing "standoff" long-range missiles capable of attacking enemies from outside their firing range, which would help Japan introduce counterstrike capabilities, and building unmanned defense systems.
Known for its pacifist Constitution, Japan has long capped its annual defense budget at around 1 percent of GDP, or about 5 trillion yen. The fiscal 2022 initial budget allocated 5.40 trillion yen for national defense.
The Ministry of Health, Labor and Welfare asked for 33.26 trillion yen, effectively the largest ever, as it excludes outlays of policies related to children and families that will be transferred to a new agency. It represents the biggest sum among the request components amid continued rises in social security spending.
The government sought 4.75 trillion yen for the new agency to be launched in April next year, covering measures to prevent child abuse and support pregnant women and child-rearing.
Requests for debt-servicing costs, such as interest payments, stood at 26.99 trillion yen, up from 24.34 trillion yen in the fiscal 2022 initial budget.
For additional responses to the coronavirus pandemic and rising commodity prices, the Finance Ministry requested reserve funds without specifying the amount. The government set aside 5 trillion yen for fiscal 2021 and 2022 each to tackle the pandemic.