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The administration of Japanese Prime Minister Sanae Takaichi is sharply expanding public spending without regard for the country’s enormous debt. Financial markets are growing increasingly uneasy over reckless policies, and long-term interest rates have topped the 3% threshold for the first time in 30 years. The government should listen to the warning bells.

The budget requests submitted by ministries and agencies for fiscal 2027 are expected to total more than 140 trillion yen (approx. $873.47 billion), setting a record high for the fourth straight year. The increase from fiscal 2026 is about 20 trillion yen (about $124.78 billion), an unusually large amount.

This reflects Takaichi’s expansionary fiscal policy. In defense spending and other areas where the prime minister has announced a fundamental buildup, requests that do not specify amounts have come one after another, meaning the actual total will rise even further.

Requests flooded into the investment framework for growth sectors prioritized by the administration, exceeding 10 trillion yen (around $62.38 billion). Until now, ceilings had been set to prevent spending from ballooning, but they were abolished, allowing a “sky’s-the-limit” approach.

The aim is to expand the size of the economy and increase tax revenue, but Japan trails the United States and China in targeted investment areas, including artificial intelligence, semiconductors and shipbuilding. Past attempts at government-led support have failed, and even reviews of those failures have been left to collect dust.

Even among items included in the growth investment framework, some conspicuous cases amount to little more than old requests with new labels. The development of expressways in regional areas is said to serve the administration’s goal of building “strong regional economies,” but as the population continues to decline, these remain projects whose cost-effectiveness is open to question.

The ballooning requests are said to reflect the prime minister’s policy of consolidating into the initial budget the later supplemental budgets that have become routine. But supplemental budgets have long been criticized for being subject to weak checks on their necessity and other factors. If they are simply piled onto the initial budget, that will only accelerate reckless fiscal management.

If there is no brake on rising interest rates, debt will mount and become a heavy burden on fiscal management. Debt-servicing costs for government bonds are projected to reach just over 36 trillion yen (approx. $224.59 billion) in fiscal 2027, more than 5 trillion yen (about $31.19 billion) higher than in fiscal 2026.

The funding source for the consumption tax cut on food the prime minister touts as a measure against rising prices also remains unclear. If government bond issuances increase substantially, the yen could be sold off, accelerating inflation and making people’s lives even harder.

Social security costs, which account for more than 30% of the budget, will continue to rise as the population ages. If Japan remains mired in debt, it will be unable to get through its super-aged society era.

The hollowing out of fiscal discipline shakes the foundations of the economy and society. Prime Minister Takaichi must show a path toward restoring fiscal health.