No. 1421 Requests for Compilation of General Account of Fiscal 2026
Compilation of government budget has begun on the general account of fiscal 2026: approximations are proposed, being the biggest in the history and accounting as 122 trillion and 400 billion yen, an increase by 6% from that of the current fiscal. Some are rough estimates without numerical figures. A total will rise. Two new elements are incorporated in the next budget.
PRICES AND WAGES CIRCULATE WELL - THIS IS A LIE
Financial measures for inflation-led economy
One of the new elements lies in the measures to reflect surges of raw material prices and labor costs on the entire expenditure – a budget adjustment to shift toward inflation (Minister of Finance Kato).
From an economic point of view, ‘the budget for the fiscal 2026 aims to attain to a growth-based economy initiated by wage hikes in the process of expanding shares. Universal and steady payments of higher salaries will be made, exceeding price hikes’ (the Basic Policy Package 2025).
The government calculates a fiscal space; it will consecutively gain bigger tax revenue from the inflation-led economy, obtaining annually as much as 10 trillion yen.
‘A world with interest rates’
The other element is a concept of ‘a world with interest rates’: that a budget is to be compiled in the ‘world with interest rates’ after the Bank of Japan’s scrapping of the negative rate policy in March 2024. Under the new circumstances, the facts that ‘the long-term interest rates have remained high’ and that ‘the accumulated balance of government bonds grows’, which are the expressions used by Minister Kato, are reflected on the expenditure for government bonds in the recent requests made by the ministries.
The outlay for government bonds is usually spent on payment and redemption of interests of the bonds. Recently the Ministry of Finance raised the interest rate to 2.6% in its assumption from the current 2%. Thus, the requested figures exceed the level of current fiscal, 28 trillion and 217.9 billion yen, reaching the history-biggest sum, 32 trillion and 386.5 billion yen.
Recently, as of last May, the Ministry found an unsuccessful billing of the 20-year bonds, and in July raised the interest rate for the 10-year bonds, which is an index for long-term interest rates, to a level of 1.6% for the first time in the past 17 years. Some uncertainties are seen here for further hikes in the interest rates.
Military expenditure goes up for the next fiscal
Requests were made by the Ministry of Defense, too, which counts 8 trillion and 845.4 billion yen, which is the largest with an increase by 145.0 billion yen. In addition, the ministry has presented the items without figures, which will expand the figure of rough calculations.
The Ministry has requested freshly expenses for drones; it has allocated 128.7 billion yen (the contracted sum) to deploy unmanned vehicles massively on the ground and sea as well as in the air to patrol the coasts. The program is to build up the ‘multiple-layered coastal defense system.’
Furthermore, the ministry has appropriated 1 trillion and 24.6 billion yen (the contracted sum) for the ‘stand-off defense capabilities’ which aims to carry out offensive against enemy bases. It has allocated 1 trillion and 73.8 billion yen (the same) for consolidating the facilities, including underground installations of commanding headquarters.
However, a period has not been set when the income tax is heightened, which is one of the main sources for budgeting. Debates inside the ruling bloc will continue until the year-end.
Real wages keep declining
A theory of an inflation-led economic growth does not mirror people’s real living. The current wage increases do not catch up with price hikes, bringing a decline in real term wages in the long run. In addition, taxes due to inflation (that is the consumption tax and the income tax increase) further hit people. Big wage increases and tax reforms are crucial to redistribute wealth.
来年度政府一般会計の編成が始まり、概算要求は今年度より６％多い１２２兆・４千億円余と過去最大。事項要求のみも多く、さらに膨らむ。この26年度予算では二つの要因が新たに加わった。
インフレ型財政へ
概算要求での新要因の一つが、資材価格や人件費の上昇を広く経費に反映させたこと。「インフレ局面での予算編成」（加藤財務相）への移行である。
経済的には、「パイを拡大する中で、物価上昇を上回る賃上げを普及・定着させ、賃上げを起点とした成長型経済の実現」（「骨太方針25」）の目論みだ。
政府は、このインフレ型経済で高い税収が続き、年10兆円もの財政余力が生じると皮算用する。
「金利ある世界」
もう一つが24年３月の日銀のゼロ金利政策解除後の、「金利のある世界」での予算編成だ。この下で概算要求での国債費に、加藤大臣が言う「足元の長期金利水準の高止まり」＋「国債残高の累増」が反映した。
国債費は国債の利払いや償還に充てるものだが、財務省は利払いの想定金利を今年度２％から２・６％へ引上げた。これらにより、要求額は今年度28兆２１７９億円を上回り、過去最大の32兆3865億に上った。
直近の背景にあるのが、今年5月での20年物国債の金利が17年ぶりに１・６％台への水準上昇がある。ここには、一層の金利高への将来不安も垣間見える。
軍拡予算が来年も
防衛省の概算要求額は８兆８４５４億円で、今年度予算を１４５０億円上回る過去最大に。さらに事項要求があり、要求はさらに膨れる。
新たな点は、ドローンなどの無人機を陸と海と空域に大量配備し沿岸を守るとする「多層的沿岸防衛体制」構築に１２８ ７ 億円（ 契約金額）を計上したこと。
また、敵基地攻撃も視野に入れる「スタンド・オフ防衛能力」に１兆２４６億円（同）、主要司令部地下化など施設強靱化に１兆７３８億円（同）を注ぐ。
だが、財源の一つの所得税増税の開始時期は決まっておらず、与党内での議論が年末へ続く。
低下続く実質賃金
インフレ型経済成長論は現実生活を反映していない。賃金上昇が物価高に追い付かず、実質賃金の低下が続いているのだ。さらにインフレ税（＝消費税と所得税の増税）が生活困窮に追い打ちをかける。賃金大幅引上げと所得再分配の税制改革が急務である。
英訳版↓
No. 1421 Requests for Compilation of General Account of Fiscal 2026
Compilation of government budget has begun on the general account of fiscal 2026: approximations are proposed, being the biggest in the history and accounting as 122 trillion and 400 billion yen, an increase by 6% from that of the current fiscal. Some are rough estimates without numerical figures. A total will rise. Two new elements are incorporated in the next budget.
PRICES AND WAGES CIRCULATE WELL - THIS IS A LIE
Financial measures for inflation-led economy
One of the new elements lies in the measures to reflect surges of raw material prices and labor costs on the entire expenditure – a budget adjustment to shift toward inflation (Minister of Finance Kato).
From an economic point of view, ‘the budget for the fiscal 2026 aims to attain to a growth-based economy initiated by wage hikes in the process of expanding shares. Universal and steady payments of higher salaries will be made, exceeding price hikes’ (the Basic Policy Package 2025).
The government calculates a fiscal space; it will consecutively gain bigger tax revenue from the inflation-led economy, obtaining annually as much as 10 trillion yen.
‘A world with interest rates’
The other element is a concept of ‘a world with interest rates’: that a budget is to be compiled in the ‘world with interest rates’ after the Bank of Japan’s scrapping of the negative rate policy in March 2024. Under the new circumstances, the facts that ‘the long-term interest rates have remained high’ and that ‘the accumulated balance of government bonds grows’, which are the expressions used by Minister Kato, are reflected on the expenditure for government bonds in the recent requests made by the ministries.
The outlay for government bonds is usually spent on payment and redemption of interests of the bonds. Recently the Ministry of Finance raised the interest rate to 2.6% in its assumption from the current 2%. Thus, the requested figures exceed the level of current fiscal, 28 trillion and 217.9 billion yen, reaching the history-biggest sum, 32 trillion and 386.5 billion yen.
Recently, as of last May, the Ministry found an unsuccessful billing of the 20-year bonds, and in July raised the interest rate for the 10-year bonds, which is an index for long-term interest rates, to a level of 1.6% for the first time in the past 17 years. Some uncertainties are seen here for further hikes in the interest rates.
Military expenditure goes up for the next fiscal
Requests were made by the Ministry of Defense, too, which counts 8 trillion and 845.4 billion yen, which is the largest with an increase by 145.0 billion yen. In addition, the ministry has presented the items without figures, which will expand the figure of rough calculations.
The Ministry has requested freshly expenses for drones; it has allocated 128.7 billion yen (the contracted sum) to deploy unmanned vehicles massively on the ground and sea as well as in the air to patrol the coasts. The program is to build up the ‘multiple-layered coastal defense system.’
Furthermore, the ministry has appropriated 1 trillion and 24.6 billion yen (the contracted sum) for the ‘stand-off defense capabilities’ which aims to carry out offensive against enemy bases. It has allocated 1 trillion and 73.8 billion yen (the same) for consolidating the facilities, including underground installations of commanding headquarters.
However, a period has not been set when the income tax is heightened, which is one of the main sources for budgeting. Debates inside the ruling bloc will continue until the year-end.
Real wages keep declining
A theory of an inflation-led economic growth does not mirror people’s real living. The current wage increases do not catch up with price hikes, bringing a decline in real term wages in the long run. In addition, taxes due to inflation (that is the consumption tax and the income tax increase) further hit people. Big wage increases and tax reforms are crucial to redistribute wealth.
October 1, 2025