The Japanese government has approved a record defence budget this fiscal year amid increasing security threats.

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The country’s defence ministry said Japan was facing its "most severe and complex" security environment since World War II. Of the total $730 billion budget for the year starting April 2025, over $55 billion have been earmarked for defence spending. The increased budget conforms to Prime Minister Shigeru Ishiba’s assertion that more spending on defence was necessary to deal with fresh challenges in the neighbourhood.

It must be noted that Japan is bound by its pacifist post-war constitution, which severely limits its ability to undertake major defence measures. However, Tokyo had updated its defence policy in 2022, in the backdrop of rising security threats from China. In that year, Japan vowed to double its defence spending to comply with the NATO standard of two per cent of GDP by the year 2027.

The government said Japan will use the increased defence funding to boost its Self-Defense Forces (SDF) and improve ties with allies such as the US. Japan is also mulling developing a system to track satellite data to be better prepared to monitor and tackle missile threats from North Korea.

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"Strengthening our defence capabilities is something we're actively working on," Ishiba said at an event organised by the Yomiuri newspaper on Thursday.

"Now matter how great our military tanks or vehicles are, it's pointless if we don't have enough people to move them," said the prime minister, who has vowed to fix a shortage of new troops.

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Focus on declining birth rate

The budget has also focused on resolving the other biggest crisis facing Japan today: The falling birth rate. Japan remains one of the world’s oldest societies, with 29.3 per cent of population aged 65 or more. The government will now spend more on social welfare spending and economic planning.

(With inputs from agencies)