Diet enacts record ¥122.31 tril budget for FY2026 after delay

TOKYO — The Diet on Tuesday passed a record 122.31 trillion yen ($767 billion) budget for the year through next March, marking the first time in 11 years the annual spending plan has failed to be enacted before the April 1 start of the fiscal year.

As the budget, reflecting Prime Minister Sanae Takaichi's expansionary fiscal stance to spur growth, does not include steps in response to rising energy and other costs stemming from the Iran war, opposition lawmakers are already calling on the government to consider drafting a supplementary budget.

Although the ruling camp, led by Takaichi's Liberal Democratic Party, is in the minority in the 248-member House of Councillors, the draft budget passed after securing support from some opposition members. The budget bill cleared the more powerful House of Representatives on March 13.

The general account budget is a record high for the second consecutive year as welfare expenditure rises amid the aging of the population. It includes a record 9.04 trillion yen for defense-related purposes.

While revenues have grown from last year, the government plans to issue 29.58 trillion yen in new bonds to cover a shortfall, underscoring Japan's heavy reliance on debt at a time when its fiscal health ranks worst among Group of Seven economies.

Takaichi's announcement in January of a snap election, held on Feb. 8, had delayed the start of deliberations on the fiscal 2026 draft budget by around a month compared to previous years.

Capitalizing on the supermajority the ruling LDP won in the election, it was able to push the initial draft budget through the lower house by cutting short deliberations, overriding opposition protests.

But in the upper house, the opposition did not allow the LDP-led coalition to control the pace of deliberations, thus blocking Takaichi's bid to have the annual budget enacted in time for the new fiscal year.

After it became certain that the budget would miss the deadline, an 8.56 trillion yen stopgap budget was enacted on March 30 to fund the government's spending for 11 days from April 1.

The provisional budget, the first to be drafted since 2015 under then Prime Minister Shinzo Abe's government, will be absorbed into the fiscal 2026 budget and expire. It covered basic government services, including welfare payments and new policies such as an expansion in private high school tuition subsidies.

The Constitution stipulates that a budget is automatically enacted if the upper house fails to vote on it within 30 days of receiving it from the lower house, which in this case would be April 11, as the lower house's vote takes precedence.

Instead of waiting for automatic enactment, the LDP focused on putting the draft annual budget to the upper house vote as soon as possible.

© KYODO