Photo/Illutration Prime Minister Sanae Takaichi heads to her office on Nov. 28. (Takeshi Iwashita)

The Cabinet on Nov. 28 approved a supplementary budget proposal totaling 18.3 trillion yen ($117 billion) for fiscal 2025 that will cover many items of the huge economic package approved a week ago.

Prime Minister Sanae Takaichi’s administration is seeking passage of the extra budget in the current extraordinary Diet session.

Included in the budget proposal is 1.1 trillion yen in additional defense spending, which would bring the total amount in the current fiscal year to 11 trillion yen.

That means defense spending will exceed 2 percent of gross domestic product.

The government initially set fiscal 2027 as the target date for achieving the 2-percent goal.

In her first Diet policy speech, Takaichi pledged to move forward that goal, largely because U.S. President Donald Trump has been pressuring allies to increase their defense spending.

The Defense Ministry will be allocated a record 847.2 billion yen in the supplementary budget, mainly for aircraft, ships and medium-range surface-to-air missiles.

The size of the supplementary budget calls for the issuance of 11.6 trillion yen in new government bonds, but most will have a maturity date of five years or less.

Interest rates for super long-term bonds with maturities of 20 to 30 years have risen sharply recently.

The government decided on the issuance of new bonds even though tax revenues exceeded initial budget projections by 2.8 trillion yen, reflecting the general overall positive corporate performance.

In addition, 2.5 trillion yen will be distributed to 41 different funds that can use the money on programs over a number of years. The normal procedure is to spend money allocated in a budget in that fiscal year.

The space strategy fund will receive 200 billion yen, while the shipbuilding resuscitation fund will get 120 billion yen.

(This article was compiled from reports by Takao Shinkai, Mizuki Sato and Ryo Kiyomiya.) 

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