Japan’s ministries and agencies are expected to request more than 130 trillion yen ($819 billion) for fiscal 2027, which starts in April, exceeding the previous record of 122 trillion yen. Prime Minister Sanae Takaichi’s government has removed predetermined spending ceilings for growth-strategy investments and plans to fund policies requiring multiple years of implementation in the initial budget, rather than assuming supplementary spending will be added later. Requests could rise further before the draft budget is finalized by year-end. With fiscal 2026 tax revenue forecast at 83 trillion yen, the spending plans are likely to require new debt issuance, worsening Japan’s fiscal position, already the weakest among advanced economies. Major requests include 7.7 trillion yen from the Ministry of Economy, Trade and Industry, 8.7 trillion yen from the Ministry of Education, Culture, Sports, Science and Technology, a record 8.9 trillion yen from the Defense Ministry and about 1.2 trillion yen from the Foreign Ministry. Social security costs are expected to rise by about 390 billion yen, while debt-servicing costs are set to exceed 31.3 trillion yen. The Finance Ministry is expected to raise the assumed interest rate for calculating fiscal 2027 interest payments to 3.8% from 3.0% for fiscal 2026, as bond yields rise on expectations that the Bank of Japan will continue increasing interest rates.