Eyeing China, Japan finalises record 7.7 trillion yen defence budget for fiscal 2024

Japan has approved its defence budget for the fiscal year 2024, totalling a record 7.7 trillion yen ($54.25 billion), the second consecutive year in which the country increased defence spending by about a trillion yen from the previous year. The green light for this budget reaffirms Japan’s commitment to a five-year plan aimed at boosting military spending by 43 trillion yen. The move is a response to the evolving security landscape, characterised by a more assertive China and the unpredictability of North Korea. The 2024 budget for the year starting April represents an increase of about 17% from the previous year’s spending of 6.6 trillion yen. It includes over 200 billion yen to strengthen cyber capability as well as funding to start building ballistic missile defence warships with Aegis combat systems, the defence ministry said, estimating the cost per vessel at about 400 billion yen. A collapse in the yen has complicated Japan’s defence build-up, sources previously told Reuters, forcing the government to initially reduce its defence procurement plan as the currency has lost 10% of its value against the U.S. dollar since the spending plan was disclosed in December 2022. The ministry said that out of over 9 trillion yen worth of new contracts, it plans to sign in the coming fiscal year, almost 2 trillion yen would be settled in foreign currency and could be impacted by currency fluctuation. With inputs from Reuters.