Photo/Illutration Finance Minister Shunichi Suzuki, left, and Defense Minister Yasukazu Hamada speak to reporters at the prime minister’s office on Nov. 28. (Tsubasa Setoguchi)

Prime Minister Fumio Kishida has given the official nod to significantly boost Japan’s defense budget to 2 percent of gross domestic product in fiscal 2027, according to the ministers of finance and defense.

They said the prime minister instructed them on Nov. 28 to secure the necessary funds for what will constitute a major increase to overall defense spending, which has long been capped at 1 percent of GDP.

Kishida has been talking about a significant ramp up of defense spending for some time, but this is the first time he has produced a price tag and timeline.

“We will take budgetary measures so that defense spending, combined with related projects, will reach 2 percent of current GDP,” Kishida said, according to Defense Minister Yasukazu Hamada. “We will first make the utmost efforts to overhaul the government's expenditures. But it is essential to have solid financial resources to stably support defense spending.”

Based on an initial forecast of Japan’s GDP for fiscal 2021, 2 percent would constitute somewhere around 11 trillion yen ($79 billion) of the 559 trillion yen produced in the country. 

Overall defense spending for fiscal 2021 was budgeted at 6.1 trillion yen, which was 1.09 percent of GDP. But by adding in other expenses so it falls under NATO definitions, that figure rises to 6.9 trillion yen, which is 1.24 percent of GDP.

Hamada said he was told by the prime minister that Japan’s defense capability “needs to be maintained and strengthened” and the government needs to “devise creative ways to secure the necessary funds swiftly and firmly, instead of just saying we cannot do so due to a lack of financial resources.”

According to Hamada, Kishida also said the government will settle on the scale of defense spending for the next five years, from fiscal 2023 to fiscal 2027, by the end of this year, after discussing the issue with the ruling coalition.

According to sources close to the prime minister, Kishida explained that to senior officials of the ruling Liberal Democratic Party sometime over the past few days. Those senior officials include LDP Vice President Taro Aso and other members of the council on foreign and security policy, which has been discussing the revisions of three key security policy documents.

But those sources also said that the government spending cannot turn on a dime.

“We can’t suddenly raise taxes starting the next fiscal year,” one said.

Expenditures that will be newly combined with the defense spending will be mainly made up of items that “contribute to the strengthening of the comprehensive defense system,” which were shown in a report compiled by the government’s expert panel on Nov. 22.

Those expenses will come from the budgets of other ministries. They consist of four fields: research and development, cybersecurity, international cooperation and public infrastructure such as ports.

The new spending measures will also include the budget for the Japan Coast Guard and pensions for veterans and bereaved families of soldiers.

(This article was written by Naoki Matsuyama and Kuniaki Nishio.)

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