TOKYO, Japan: Beginning in April, Japan will allocate 40 trillion to 43 trillion yen ($295 billion-$318 billion) over five years for defense spending.
The plans is 27.5 trillion yen more than the current five-year defense plan, causing concerns about one of the worst debt burdens in the developed world, amounting to twice the country's annual economic output.
In response to the increasing assertiveness of Beijing, Prime Minister Fumio Kishida instructed Finance Minister Shunichi Suzuki and Defence Minister Yasukazu Hamada to draft a defense spending plan that will allocate 2 percent of GDP over five years, compared with the current 1 percent.
Suzuki and Hamada are expected to again meet with Kishida this month to agree on the spending plan's details.
"It will not be critical to spend some 40 trillion yen. The question is whether the government could secure funding sources and whether we can let the money flow through domestic defense and related industries to back the economy," said Takuya Hoshino, senior economist at Dai-ichi Life Research Institute, as quoted by Reuters.
"If we spend the money to buy weapons and other military goods overseas, that would trigger capital outflows and yen depreciation," he added.
Reuters reported that due to opposition from many lawmakers against tax increases, Japan is expected to delay the spending increase for at least one year, which would offer fewer options to secure funding for boosting military spending.