Finance Minister Katayama (片山): FY2027 Preliminary Budget Request Totals ¥143.1 Trillion; Emphasizes There Were “No Demands” Regarding Treasury Secretary Bessent’s “Reflation Policy Remarks” (4 September Press Conference)

At a post-Cabinet-meeting press conference on 4 September, Finance Minister Katayama (片山) explained that the FY2027 general-account preliminary budget request would total approximately ¥143.1 trillion. Katayama (片山) said the appropriate comparison was not with the previous year, but with the combined total of the FY2025 supplementary budget and the FY2026 initial budget, approximately ¥141 trillion, putting the increase at only about ¥2.5 trillion. Katayama (片山) also outlined a policy of prioritizing fiscal spending and reviewing subsidies and special tax measures.

Katayama (片山) said the government would work to improve the efficiency of long-term capital use, with the aim of “turning idle funds into productive funds.” Katayama (片山) said the newly established “Strong and Prosperous Japan Investment Framework” would account for approximately ¥12.2 trillion in the general account, rising to approximately ¥14.2 trillion overall when the special-account allocations for GX, AI and semiconductors are included.

Asked about reports that the indicative target for new government bond issuance was to limit next fiscal year’s issuance to approximately ¥40 trillion, Katayama (片山) repeatedly said, “It is neither more nor less than that,” and explained that the figure had not been established as a definitive numerical target. Katayama (片山) reiterated the policy of appropriately controlling issuance over the full year.

Regarding long-term interest rates, Katayama (片山) said they were determined by market factors and that the government had secured understanding based on its explanations in Japan-U.S. consultations and at the G20. While pointing to the importance of demonstrating fiscal sustainability, Katayama (片山) again emphasized that no specific demands had been made regarding the Bank of Japan’s monetary policy.

Regarding Treasury Secretary Bessent’s remarks on reflation policy, Katayama (片山) said that, concerning the English expression “stop the reflation,” the government understood that no unilateral policy demand had been made. Katayama (片山) said the Japanese and U.S. finance ministries shared this understanding.

Regarding the Japan-U.S. finance ministers’ meeting, Katayama (片山) explained that the two sides had exchanged views on demonstrating fiscal sustainability and said the response had been positive. Katayama (片山) added that there had been no request for measures that would become a factor in yen depreciation.