Assumed interest rates up for first time in 17 years
More spending reform needed to brace for rate volatility
Balancing budget by FY202526 goal not likely, analysts say

TOKYO, Dec 22 Reuters Japan announced a cut in overall spending for the first time in 12 years in its fiscal 202425 budget, amid speculation the central bank may soon shift away from more than two decades of ultraeasy monetary policy.

The budget for the coming fiscal year that starts in April is estimated at 112.07 trillion yen 787 billion, down 2 from the current year39;s initial amount of 114.4 trillion yen.

Still, the size of the budget hovers above 110 trillion yen for two straight years amid spending pressures on military outlay to deal with threats from China and North Korea and welfare costs for Japan39;s fastageing society.

The world39;s thirdlargest economy is under pressure to restore its fiscal health in the face of rising interest rates after prolonged stimulus and spending worsened the country39;s debts the industrial world39;s heaviest public debt burden.

In estimating borrowing costs, the government adopted higher interest rates in the budget plan for the coming fiscal year, which would mark the first increase in 17 years.

The plan shows its debt dependence at 31.2, meaning new bond sales account for one third of the budget.

More than two decades of superlow interest rates have loosened fiscal discipline in a country now saddled with public debt more than double the size of the…