The Japanese government approved an additional budget of 3.1 trillion yen aimed at alleviating the impact of inflation and soaring energy prices caused by unrest in the Middle East. It plans to subsidize fuel oil prices and the cost of living for the public.
On 3 June 2026, the Japanese Cabinet led by Prime Minister Sanae Takaichi approved an additional budget of 3.1 trillion yen, approximately 690 billion baht, to address inflation pressures stemming from the conflict in the Middle East.
This measure includes establishing a new reserve fund of 2.5 trillion yen to support energy and commodity expenses, with initial efforts focused on stabilizing fuel oil prices.
Additionally, the government approved plans to secure funding for the budget, which will require additional borrowing despite new bond issuances. However, officials stated that the overall volume of bonds entering the market will not increase, as some previously approved borrowing limits from last year’s budget will be canceled. The draft budget was submitted to parliament on Wednesday and is expected to be approved by Friday. Meanwhile, the government is considering temporarily reducing the consumption tax on food and beverages to 1% starting April 2027 to ease the public’s cost of living.
Satsuki Katayama, Japan's Minister of Finance, confirmed that the measures will not pressure the bond market since the total bond issuance volume will remain unchanged, expressing confidence that the policies can proceed without disrupting the market.
Source: Japan Times