Japan's Budget Requests Hit Record 143 Trillion Yen as 10-Year Yield Reaches 3%

Japan's ministries and agencies have submitted record budget requests for the next fiscal year, drawing fresh attention to Prime Minister Sanae Takaichi's fiscal plans as the benchmark government bond yield touched 3% for the first time in 30 years. According to PANews, the total requests from 18 ministries and agencies came to about 143 trillion yen. The Ministry of Economy, Trade and Industry requested more than five times the amount it sought in the same period last year, while ministries overseeing defense and social security also submitted record requests. Markets are waiting to see how much the Takaichi government plans to spend and how it intends to finance those outlays. Concerns about Japan's fiscal outlook have been one factor weighing on the bond market. The benchmark 10-year Japanese government bond yield rose to 3% on Tuesday, the first time since 1996. Japan's Minister for Growth Strategy, Minoru Kiuchi, said on Tuesday morning that Takaichi is reforming the country's budget-making process. He said Japan has traditionally relied heavily on supplementary budgets in addition to the annual initial budget to increase spending. Kiuchi said comparisons for fiscal 2027 budget requests should be made against the combined size of fiscal 2025 supplementary budgets and the fiscal 2026 initial budget, given Takaichi's policy of reducing reliance on supplementary budgets.