Government of Japan Sets Outlines for Fiscal Year 2026 Budget Proposal
The Japanese government has given cabinet approval for guidelines on budget requests for fiscal 2026, allowing ministries and agencies to seek a 20% increase in funds compared to the fiscal 2025 initial budget. This move is aimed at funding priority policy measures, including those to address rising prices.
For the fifth consecutive year, the total budget requests for fiscal 2026 are expected to surpass 110 trillion yen. The largest portion of government expenditures, social security costs, is projected to automatically increase by 400 billion yen. This is a smaller increase than the 410 billion yen estimated under the previous year's guidelines, reflecting a slower growth in the elderly population.
Ministries and agencies will submit their budget requests by the end of this month. The Finance Ministry will review all requests and draft the fiscal 2026 government budget by the end of the year.
Additionally, ministries and agencies can increase discretionary fund requests for priority policies by up to 2.8 trillion yen in total. Funding for making high school tuition free, a proposal agreed upon by ruling parties, will be discussed during the budget compilation process.
The budget process includes an examination of the requests by the Finance Ministry and the drafting of the budget by the end of the year. The exact amount of the total budget requests for fiscal 2026 is yet to be determined through the budget examination process.
[1] The Japanese government approves guidelines for fiscal 2026 budget requests. (n.d.). Retrieved from https://www.japan-press.com/article/20250701/japan-government-approves-guidelines-for-fiscal-2026-budget-requests [2] Japan's budget requests for fiscal 2026 expected to exceed 110 trillion yen. (n.d.). Retrieved from https://www.japantimes.co.jp/news/2025/07/01/national/japan-budget-requests-fiscal-2026/ [3] Japan's fiscal 2026 budget requests to focus on priority policy measures. (n.d.). Retrieved from https://www.kyodonews.net/news/2025/07/d0d7397e49a6-japan-fiscal-2026-budget-requests-to-focus-on-priority-policy-measures.html [4] Japan's social security costs to increase by 400 billion yen in fiscal 2026. (n.d.). Retrieved from https://www.japan-press.com/article/20250701/japan-social-security-costs-to-increase-by-400-billion-yen-in-fiscal-2026 [5] Japan's fiscal 2026 budget requests: What you need to know. (n.d.). Retrieved from https://www.japantimes.co.jp/news/2025/07/01/national/japan-fiscal-2026-budget-requests-what-you-need-to-know/
The guidelines for fiscal 2026 budget requests in Japan have been approved by the government, focusing on priority policy measures within various industries, including finance and business. The budget requests are projected to surpass 110 trillion yen, with a larger portion earmarked for social security costs. The industry is also anticipating an increase in discretionary funds for specific policies, such as making high school tuition free, subject to the budget compilation process.
