Japan Finalizes Record ¥9 Trillion Defense Budget Amid Domestic Squeeze

The Lead: Finalizing the FY2026 Budget

The Japanese government is in the final stages of approving a record-high defense budget for fiscal year 2026, expected to surpass ¥9 trillion (approx. $65 billion USD). While the move signals Tokyo's continued commitment to bolstering its military capabilities in a volatile region, it puts Prime Minister Kishida's administration in a tight spot as it juggles pressing domestic issues like inflation, healthcare funding, and national disaster preparedness.

The Core: A Duel of Priorities

According to government sources on December 17, the defense allocation is set to reach the unprecedented 9 trillion yen mark. This spending is driven by Japan's medium-term defense buildup plan, which includes acquiring long-range missiles for "counterstrike capabilities" and strengthening the domestic defense industry—a significant shift in the nation's post-war security posture.

This focus on national security was echoed in a budget framework agreement on December 20 between the ruling Liberal Democratic Party (LDP) and its partner, the Japan Innovation Party (Ishin). Their plan calls for promoting investment and developing a "secondary capital function" outside Tokyo to enhance both economic growth and crisis management.

The Pushback: 'Guns vs. Butter' Debate Intensifies

The massive outlay on defense and infrastructure is fueling concerns that everyday economic struggles are being sidelined. Harumi Yoshida, acting leader of the main opposition Constitutional Democratic Party (CDP), stated on December 21, "We must question the effectiveness of the upcoming budget in dealing with high inflation," criticizing the government's proposed measures as insufficient.

This sentiment is shared even within the ruling party. On the same day, LDP General Council Chairman Shunichi Suzuki stressed the "need for support to medical institutions," advocating for an increase in medical service fees to aid a healthcare system strained by an aging population and post-pandemic financial pressures. This signals future hikes in social security spending.