The Japanese government is considering a supplementary budget for fiscal 2026 to ease the impact of elevated crude oil prices stemming from the Middle East conflict, government sources said Thursday, as calls grow among ruling and opposition parties for one to be compiled.
The government has set aside over 1 trillion yen ($6.3 billion), including reserve funds in the fiscal 2025 budget, to finance measures to respond to rising living costs, such as subsidies to curb surging gasoline prices. But concern is growing that they could run out amid uncertainty over the Iran conflict.
Prime Minister Sanae Takaichi told a Diet committee as recently as Monday that she does not see the immediate need to compile a supplementary budget, while noting the government will closely monitor price movements to respond flexibly.
A supplementary budget could further heighten worries over Japan’s fiscal health, the worst among the Group of Seven economies, with Takaichi pushing for expansionary spending to spur economic growth.
The funds allocated for gasoline subsidies had declined to around 980 billion yen by the end of April after the resumption of the program in mid-March, while hundreds of billions of yen are expected to be disbursed each month.
The government is also considering resuming subsidies for electricity and gas bills this summer, as it has repeatedly done since Russia launched a full-scale invasion of Ukraine in 2022, which also resulted in increased crude oil prices.
The subsidies are costly, with the government using 529.6 billion yen for January to March from the extra budget for fiscal 2025.
The government could tap reserve funds totaling 1 trillion yen in the fiscal 2026 budget, but critics say they should be kept for emergencies such as natural disasters.
© KYODO
