Key facts
- Proposed five-year defense spending of 50 trillion to 60 trillion yen compares with 43 trillion yen in the current plan, the sources said.
- Some defense officials and ruling party lawmakers had assumed an 80 trillion yen budget in talks with contractors, the sources said.
- Planned purchases of some missiles and aircraft, including US-built F-35 stealth fighters, could be cut by up to half, the sources said.
- A Defense Ministry spokesperson said nothing had been decided on the size of the next buildup plan.
- Mitsubishi Heavy Industries and Mitsubishi Electric declined to comment; Kawasaki Heavy Industries did not immediately respond.
Japan's Finance Ministry has proposed spending 50 trillion to 60 trillion yen ($313 billion to $376 billion) on defense over the five years starting in April 2027, four people familiar with the matter told Reuters. The figure is more than the 43 trillion yen in the current five-year plan but well below the 80 trillion yen that some defense officials and ruling Liberal Democratic Party lawmakers had assumed and used in negotiations with contractors.
The lower figure could mean cuts of up to half in planned purchases of some missiles and aircraft from domestic and overseas suppliers, including US-built F-35 stealth fighters, the people said, speaking on condition of anonymity because they were not authorized to speak to the media. Drone orders would not be affected by the revised funding proposal, one of the people said.
Japan's biggest defense contractors include Mitsubishi Heavy Industries, Mitsubishi Electric Corp and Kawasaki Heavy Industries. Mitsubishi Heavy and Mitsubishi Electric declined to comment, while Kawasaki Heavy did not immediately respond to a request for comment.
Finance Minister Satsuki Katayama told reporters the advisory panel on security and defense had not yet discussed matters at that level of detail. A Defense Ministry spokesperson said nothing had been decided on the size of the next defense buildup plan and that Japan's position was to determine what it needs for its defense and build up the budget accordingly.
Finance Ministry officials argue a steep increase would be difficult to fund alongside Takaichi's commitments to invest in economic growth and cut the sales tax on food, which would squeeze government revenue, three of the sources said. The sales tax cut would leave an annual 4.3 trillion yen revenue shortfall that would have to be filled through other funding sources, potentially including foreign exchange reserves.