Japan plans 3 trillion yen extra budget amid concerns over fiscal strains

Japan will compile an extra budget of about 3 trillion yen, Prime Minister Sanae Takaichi said on May 25, as the government moves to cushion households from higher fuel and utility costs while trying to calm concerns about fiscal strain.

Reuters reported that the package is aimed at subsidy support for fuel and utility bills, with policymakers facing pressure from higher import costs and a weak yen. The plan comes after days of reporting that the government was considering a supplementary budget to help absorb rising living costs.

Officials are also trying to avoid increasing overall bond issuance. According to Reuters, the government wants to rely instead on stronger tax and non-tax revenue and underspending to help finance the package.

The move adds to scrutiny of Japan’s fiscal path at a time when markets are watching whether the government can deliver cost-of-living support without leaning too heavily on new debt.

Earlier Reuters coverage on May 17 and May 21 said an extra budget was under consideration, and that officials were looking for ways to limit fresh borrowing. Monday’s announcement is the first confirmed public statement that the government will compile the package.