Japan’s Cabinet has approved a ¥3.1 trillion ($19.4 billion) extra budget to fund measures meant to cushion households from inflation tied to Middle East turbulence, putting fiscal policy back in the spotlight for bond investors.
Prime Minister Sanae Takaichi’s Cabinet has endorsed a ¥3.1 trillion package that includes a newly created ¥2.5 trillion reserve fund to respond to rising prices for commodities by providing subsidies. While the government has yet to specify the usage of that fund, it is expected to be used initially to cap costs for gasoline.
The Cabinet also approved a plan to fund the package that will require new debt financing. Despite the additional borrowing, the government will manage to keep total bond issuance unchanged on a calendar basis, as some debt authorized under last fiscal year’s budget will be canceled, the plan showed.
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