Defense spending rises for 13th consecutive year
The progressive growth of social security costs and the new increase in defense spending will once again be the main capital expenditure for the Tokyo government, which has just approved the budget law for a record value of 115,500 billion yen , equivalent to 703 billion euros for fiscal year 2025. The draft will be presented to the Diet for deliberations during the regular session starting next month. Despite record tax revenues for the sixth consecutive year, conservative Prime Minister Shigeru Ishiba said financial authorities will be forced to issue new bonds worth 28.6 trillion yen to help finance the budget, highlighting the government’s continued dependence from debt.
About a third of the budget, equal to a record 38,280 billion yen, will be used to cover welfare costs, due to the rapid aging of the population, with those over 65 now representing almost 30% of the inhabitants of the archipelago, and in the face of the executive’s attempts to improve assistance to young families, stemming the irrepressible decline in births. Defense spending amounts to 8,700 billion yen (53 billion euros), a level never so high, with the Land of the Rising Sun aiming to improve its military capabilities, as hoped for by its US ally, despite the limits of Pacifist Constitution, in the context of what is interpreted as China’s growing expansionism in the region, and the threats of North Korea’s missile and nuclear program.
Specifically, the defense budget – increasing for the 13th consecutive year, includes expenses for the mass production of surface-anti-ship missiles to hit enemy bases with different attack profiles, as well as unmanned drone monitoring systems produced by American General Atomics Aeronautical. To stimulate the economy, the budget also includes state incentives in the semiconductor and artificial intelligence sectors, with 100 billion yen earmarked for domestic high-end chip company Rapidus. Prime Minister Ishiba sits at the head of a minority government after the coalition led by the Liberal Democrats together with the Buddhist-inspired Komeito party lost the majority in the Lower House in the general elections held at the end of October.
