Fri Dec 26 01:52:04 UTC 2025: Here’s a summary of the text and a rewritten news article:

Summary:

Japan’s Prime Minister Sanae Takaichi’s cabinet has approved a record $785 billion budget for the next fiscal year. The budget attempts to balance proactive fiscal policy with concerns about rising debt. While the budget includes record spending, it also aims to limit new bond issuance and reduce the debt dependence ratio. Increased tax revenues are expected to help, but rising debt-servicing costs and increased spending on social welfare and defense will strain the budget. Japan already has a high debt burden, making it vulnerable to rising interest rates. Takaichi plans to adjust the fiscal consolidation goal to allow for more flexible spending.

News Article:

Japan Approves Record $785 Billion Budget Amid Debt Concerns

Tokyo, Japan – December 26, 2025 – Prime Minister Sanae Takaichi’s cabinet has approved a record 122.3 trillion yen ($785 billion) budget for the upcoming fiscal year, signaling a tightrope walk between proactive spending and growing national debt worries. The budget, approved Friday, December 25, 2025, is designed to reassure investors amidst rising government bond yields and a weakening yen.

While the budget surpasses this year’s initial allocation of 115.2 trillion yen, the government aims to keep new bond issuance relatively stable at 29.6 trillion yen, a slight increase from the current 28.6 trillion yen. This move is projected to lower the debt dependence ratio to 24.2%, the lowest since 1998.

The government expects a record 83.7 trillion yen in tax revenues, a 7.6% increase, to help offset rising debt-servicing costs, which are projected to jump 10.8% to 31.3 trillion yen. The interest rate is assumed at 3.0%, the highest level in 29 years, reflecting the Bank of Japan’s move away from ultra-loose monetary policy.

Japan’s existing debt burden, already more than twice the size of its economy, poses a significant challenge. This sensitivity to rising borrowing costs complicates Prime Minister Takaichi’s ambitions for aggressive fiscal stimulus. In response, Takaichi intends to revise Japan’s fiscal consolidation goal, allowing for greater spending flexibility in the coming years.

The budget will be submitted to parliament early next year.

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