# Japan enacts record ¥122.3 trillion budget as expansionary policy takes shape
Japan’s upper house has enacted a ¥122.3 trillion budget for fiscal 2026, the largest state allocation in the country’s history and a clear signal that Prime Minister Sanae Takaichi intends to keep fiscal policy expansionary.
The source in the packet says the budget was approved by the House of Councillors after an emergency stopgap measure had been required at the end of March, when the full bill had not cleared the upper chamber in time for the start of the fiscal year. The lower house had already approved the plan earlier in March, but the upper house remained a hurdle because the ruling bloc lacked the numbers to pass it smoothly.
The final package is large enough to shape Japan’s policy debate well beyond the vote itself. It includes major allocations for social security, education and defense. Social security accounts for roughly a third of spending. The plan also adds money for free high school tuition and public elementary school meals, alongside a rise in defense spending. Those items show the government is trying to combine domestic relief, family support and security policy in one fiscal framework.
That mix reflects Takaichi’s broader political objective. The evidence says the budget confirms her push for an expansionary stance. It also shows why markets have become uneasy. Japan already carries one of the highest debt loads among major economies, and a budget of this size will require substantial borrowing. Rising government bond yields and a weakening yen are signs that investors are already testing how much room the government has to spend without worsening financial pressure.
The timing adds another layer. Japan’s fiscal process was disrupted after a snap election and an unusual delay in budget passage, forcing the government to rely on temporary spending authority before full approval. That procedural wrinkle is important because it helps explain why the spending bill failed to clear the usual April 1 deadline for the first time in years.
Still, the passage of the budget turns the government’s economic preferences into executable policy. The state is now committing to higher outlays for social support, education and defense at a moment when inflation, currency weakness and bond-market pressure are already under scrutiny. Supporters will argue the package protects households and reinforces long-term growth. Critics will say the debt burden and borrowing requirement make the strategy risky.
The packet’s evidence supports both sides of that debate, but the immediate fact is clear: Japan has enacted its biggest budget on record, and the approval gives Takaichi a stronger mandate to pursue expansionary fiscal policy in the months ahead.
