TOKYO — Prime Minister Sanae Takaichi’s administration on Friday approved a supplementary budget worth 18.3 trillion yen ($117 billion) for the current fiscal year, aimed at supporting a large-scale economic stimulus package. The bulk of the funding will come from newly issued government debt.
The additional spending surpasses last year’s 13.9 trillion yen allocation, highlighting Takaichi’s expansionary fiscal strategy, which has raised renewed concerns about Japan’s already heavy debt load.
The government had unveiled a 21.3 trillion yen ($137 billion) stimulus plan last week — the biggest since the pandemic — designed to soften the impact of inflation on households and revive economic momentum.
Part of the package will be financed by better-than-expected tax revenue and other non-tax income. Tax collections are estimated to exceed the initial forecast by 2.88 trillion yen, topping 80 trillion yen for the first time.
However, the remaining gap will be covered through 11.7 trillion yen in additional bond issuance, a sharp increase compared with around 6.7 trillion yen in extra bonds issued last year.
To ease market concerns about rising long-term interest rates, the government plans to boost issuances of short- and medium-term securities while keeping long- and super-long bond supply steady.
The stimulus measures include 2.7 trillion yen in tax reductions and 8.9 trillion yen to help households with daily expenses, such as 20,000 yen cash payments per child and subsidies for electricity and gas. A further 6.4 trillion yen will be invested in strategic industries including shipbuilding, semiconductors, and artificial intelligence.
Shunsuke Kobayashi, chief economist at Mizuho Securities, noted that as a minority government in both houses of parliament, Takaichi’s administration appears to have had to strike broad compromises with coalition partners, opposition parties, local authorities, and business groups to secure support for the budget.
The government aims to have the legislation approved by parliament by the end of next month.
Takaichi has emphasized that fiscal discipline remains a priority, pledging to reduce the debt-to-GDP ratio — the highest among advanced economies. Even with the supplementary budget, total bond issuance for the year is projected at 40.3 trillion yen, below last year’s 42.1 trillion yen.
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