TOKYO: The Japanese government is expected to adopt a draft state budget for fiscal 2025 with record general-account spending of around 115.5 trillion yen, sources said Wednesday.

Debt-servicing expenses for the year from next April are also seen hitting a record high, as the government plans to raise the assumed interest rate for its debt servicing to around 2.0 percent on higher long-term interest rates that followed the Bank of Japan’s interest rate hikes.

Also, costs related to social security and defense will be the highest ever.

The draft budget, to be approved at a cabinet meeting Friday, would exceed 110 trillion yen for three years in a row on a regular budget basis.

The fiscal 2024 initial budget included general-account spending of 112,571.7 billion yen, posting the first drop in 12 years. However, the fiscal 2025 budget would exceed the record high of 114,381.2 billion yen under the fiscal 2023 budget.

Debt-servicing expenses for fiscal 2025 are expected to exceed the 27,009 billion yen under the fiscal 2024 budget, hitting a record high for the fifth straight year.

The assumed interest rate would reach 2 percent for the first time in 13 years on a regular budget basis. The rate was kept at a record low of 1.1 percent for seven years until fiscal 2023 before being raised to 1.9 percent in fiscal 2024.

Meanwhile, internal affairs minister MURAKAMI Seiichiro and Finance Minister KATO Katsunobu agreed to fix the total amounts of tax allocations to be received by local governments at 19 trillion yen for fiscal 2025, up 300 billion yen from fiscal 2024 for seventh straight growth.

JIJI Press