Budget Toolkit: Japan

How much ODA does Japan contribute?

Japan’s ODA stood at US$17.6 billion in 2021, making Japan the third-largest OECD DAC donor country in absolute terms, and the largest in Asia.

ODA represented 0.34% of Japan’s GNI, making it the 12^th-largest DAC donor relative to its GNI.

What are the main sources of Japan's ODA?

Japan’s ODA comes from several budgetary sources, primarily the General Account. Additional ODA comes from various other budget sources, including the Special Account, the MOF’s FILP, and capital from JICA. Special accounts make up a minor share of where ODA is allocated, but they are dedicated to specific government activities, have their specific revenue source, like interest and borrowing, and receive transfers from the general account.

Who decides on the development budget?

Japan has a constitutional monarchy with a parliamentary government, and its governmental structure comprises three main branches: the executive, legislative, and judicial branches.

The Executive Branch:

Emperor: Japan is a constitutional monarchy, and the Emperor serves as the symbolic head of state with no governing powers.

Prime Minister and Cabinet: The executive power is vested in the Prime Minister, who is the head of government. The Cabinet, appointed by the Prime Minister, holds the main executive authority. The Finance Minister, a key member of the Cabinet, plays a crucial role in the budget process.

The Legislative Branch:

National Diet: Japan's Parliament, known as the National Diet (Kokkai), is bicameral, consisting of two houses: the House of Representatives (Shugiin) and the House of Councillors (Sangiin). Elections within the Diet take place every four years for the lower house and three years for the upper house.

The government, led by the Prime Minister, prepares the annual budget proposal, which includes details on government revenues, expenditures, and economic forecasts. The Finance Minister presents the budget to the National Diet.

The budget process involves a thorough review and debate in both houses of the National Diet. The House of Representatives plays a central role, and if there is a disagreement between the two houses, the decision of the House of Representatives prevails. The budget must be approved by the National Diet to become law.

The Judicial Branch:

Does not directly participate in the budget process.

Key Stakeholders

When and how are decisions on Japan's budget made?

The Japanese government’s fiscal year runs from April 1 to March 31.

Timeline

In addition to this annual budget cycle, ministries can submit supplementary budget requests for the ongoing fiscal year between August and November. These are assessed by the MOF, negotiated in the Diet, and approved by the Cabinet and the Diet between December and January.

What does the current development budget tell us about Japan’s ODA?

As part of the government's stated intentions to increase ODA, ODA rose by 19% to 0.39% of GNI in 2022. Much of this was increased bilateral lending, including to Ukraine, reflecting Japan's preference to channel bilateral funding as loans. The FY2023 ODA budget increased by 14% compared to 2022.

Japan’s short-term development priorities are set in its annual Priority Policy for International Cooperation document and are foreshadowed in the annual budget, which is typically released in the preceding months. The Priority Policy has contained the same broad priorities since FY2016:

• Peace and stability within the international community;
• Responding to global challenges;
• Economic diplomacy; and
• Promotion of “high-quality growth.”

Japan’s long-term development objectives are defined in its Development Cooperation Charter, which was revised in 2023.

What are the next steps?

On December 22, 2023, the Cabinet approved a JPY112 trillion (US$787 billion) budget bill, which marked the first budget decline in 12 years due to the reduction in COVID-related emergency funding. Expenditures for defense, social security, and debt-servicing reached record highs. The budget has now been sent to the Diet for debate and amendments, particularly by the Budget Committee. A decision on the budget is expected in March 2024.

On November 10, 2023, it was reported that the Japanese Ministry of Foreign Affairs is requesting a budget dedicated to the offer-based approach for fiscal year 2024. There are hopes that this budget will be allocated in addition to the regular ODA budget, as the new approach is expected to require significant resources. Japan’s new Development Cooperation Framework marked a significant transformation in the country’s approach to ODA. The new framework moved away from the traditional request-based approach, where Japan would respond to requests from partner countries, and toward an offer-based approach, where Japan will proactively make proposals and actively engage in dialogue and collaboration with other countries.