The Japanese government has approved an additional budget worth 18.3 trillion yen, equivalent to around 117 billion US dollars. The funds will finance the largest stimulus package since the pandemic, announced by Prime Minister Sanae Takaichi. The program includes support for households struggling with rising living costs and increased defence spending in line with the government’s previous commitments.
To finance the package, Japan will raise additional short-term debt. Of the total supplementary budget, 11.7 trillion yen will be covered by newly issued debt instruments. The Ministry of Finance announced that it will increase the issuance of 2-year and 5-year government bonds by 300 billion yen each, as well as treasury bills by 6.3 trillion yen. The decision to rely more heavily on shorter-maturity instruments reflects an effort to reduce pressure on the long-term bond market, where yields reached their highest level in more than 20 years in November. This structure illustrates the government’s cautious approach amid continued volatility in the debt market.
Despite additional borrowing, total bond issuance for the current fiscal year will amount to 40.3 trillion yen, down from last year’s 42.1 trillion yen. This is intended to signal the government’s ongoing commitment to responsible fiscal policy, even as budgetary needs continue to grow.
In addition to debt issuance, the package will be financed through higher-than-expected tax revenues totalling 2.9 trillion yen, unused funds carried over from the previous fiscal year (2.7 trillion yen), and 1 trillion yen in non-tax revenues. Prime Minister Takaichi noted that during the G20 summit, IMF Managing Director Kristalina Georgieva expressed a positive assessment of Japan’s approach to fiscal risk management.
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Source: ceo.com.pl/japonia-przyjmuje-pakiet-stymulacyjny-wart-183-bln-jenow-38468
