Prime Minister Sanae Takaichi’s government is preparing an extra budget for the current fiscal year that is set to surpass last year’s size, according to multiple local media reports, marking a renewed turn toward aggressive fiscal support for Japan’s slowing economy. The Nikkei reported that the Finance Ministry is drawing up an economic package worth about ¥17 trillion ($110 billion), with a supplementary budget expected to reach roughly ¥14 trillion. That figure would exceed the ¥13.9 trillion compiled a year earlier under former prime minister Shigeru Ishiba. Kyodo News similarly reported that this year’s additional budget will likely outstrip the previous one.
The expanded spending underscores Takaichi’s commitment to what she has called “responsible and expansionary finance,” a doctrine aimed at countering inflation, stabilizing household finances, and restoring public confidence after years of economic malaise. Part of the package is set to focus on price relief, including significant subsidies for winter utility bills. According to the Nikkei, electricity and gas subsidies will exceed ¥2,000 per household per month this winter, double the support offered during the summer.
The government is also weighing measures such as rice vouchers, targeted regional subsidies, and a temporary reduction in gasoline taxes. These policies reflect Takaichi’s efforts to ease voter frustration after stubbornly high prices and stagnant real wages contributed to the political downfall of predecessors Ishiba and Fumio Kishida.
Economists surveyed by Bloomberg expect about ¥15 trillion in new spending to flow into the economy once the plan is finalized. However, expectations that Tokyo will need to issue additional government bonds to finance the package have already pushed yields higher and increased pressure on the yen, raising questions about how far Takaichi can stretch fiscal policy without unsettling financial markets.
