Japan unveils $24.8 billion extra budget to subsidise surging fuel costs

Japan's government has finalized a 3.1 trillion yen (S$24.8 billion) supplementary budget to cushion households from surging energy costs. The decision comes as the nation grapples with the risk of a prolonged Middle East crisis, which heavily impacts resource-poor Japan's reliance on the region for crude oil imports.

The additional spending will primarily replenish contingency reserves used to subsidize gasoline and utility bills. While the extra budget requires new debt financing, the government plans to manage total bond issuance by offsetting it with stronger tax revenues and non-tax income. This strategy aims to avoid increasing overall bond issuance to the market.

The supplementary budget, set to be submitted to parliament soon, may heighten concerns about Japan's spending trajectory. This is particularly true as it comes barely a month after the annual budget's approval. Fiscal worries have already reverberated through the bond market, with Japan's government bonds experiencing a significant rout in May, pushing the benchmark 10-year yield to a three-decade high.

The package underscores the growing economic impact of prolonged instability in the Middle East. Japan relies heavily on the region for crude oil, essential for both fuel and the production of plastics and other goods. The government has already implemented subsidies for household electricity and gas bills through September, utilizing reserve funds. This extra budget will increase available resources for such measures to 1 trillion yen.

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I am proud to formally introduce to this honourable House, and to the Jamaican people, the Jamaica National Science, Technology and Innovation Strategic Plan 2026 to 2035, and its governing framework: the House of Innovation.