The budget request for fiscal 2025 is expected to reach a record high of over ¥117 trillion, marking the second consecutive year of increase. This comes as Japan faces various domestic and international challenges such as price increases, an aging population with declining birth rates, and a more difficult security environment. The ministries and agencies have been requesting larger budgets to address these issues.
During a meeting of the ruling Liberal Democratic Party’s relevant division, legislators discussed the draft budget request from the Health, Labor, and Welfare Ministry. They called for expanded measures to tackle the uneven distribution of doctors, who are mostly concentrated in urban areas. Social security expenditures, including medical care and pensions, account for one-third of the total government budget and have a significant impact on people’s lives.
The government has set a policy to curb the growth of social security expenditures each fiscal year within the range expected due to an aging society. However, some legislators pointed out that this baseline does not consider increases in prices and wages. The total amount of budget requests for fiscal 2025 has increased by about ¥3 trillion compared to the previous year.
In July, the government established a special quota totaling about ¥4 trillion for important policies such as wage hikes and measures against high prices. Some ministries made itemized requests without specifying amounts which could further increase the total budget request amount.
Changes in monetary policy by the Bank of Japan have led to an upward trend in interest rates. As a result, estimates for interest payments on government bonds have increased significantly over time. Finance Minister Shunichi Suzuki emphasized that appropriate actions will be taken during the budget compilation process to maintain fiscal discipline.
There are concerns that new economic measures formulated by the upcoming cabinet following LDP presidential elections may add further burden on public finances. Prime Minister Fumio Kishida had previously mentioned including benefits for pensioner-led and low-income households in these measures before announcing his intention not to run for re-election.
there is growing concern about maintaining fiscal discipline while addressing various challenges faced by Japan both domestically and internationally.