Japan Government Passes Over 3 Trillion Yen Supplementary Budget to Address Middle East Situation
The Japanese government approved a supplementary budget totaling 3.1135 trillion yen at a cabinet meeting on June 3 to address the Middle East situation. The budget allocates 2.5 trillion yen for contingency reserves related to the Middle East. Funding will be entirely covered by issuing deficit bonds, but the government claims the total issuance amount will remain unchanged. Analysts warn this could push Japan's primary balance back into deficit.
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- 📰 Published: June 3, 2026 at 16:30
- 🔍 Collected: June 3, 2026 at 16:37 (7 min after Published)
- 🤖 AI Analyzed: June 6, 2026 at 16:42 (72h 4m after Collected)
(CNA, Tokyo, June 3, Combined Foreign Reports) In response to the situation in the Middle East, the Japanese government approved a supplementary budget for the current fiscal year at an extraordinary cabinet meeting today. The total amount is 3.1135 trillion yen (approximately NT$620 billion), and it has been submitted to the Diet for deliberation, with passage expected on the 5th.
According to reports from NHK, the Asahi Shimbun, and the Yomiuri Shimbun, 2.5 trillion yen (approximately NT$500 billion) will be allocated as contingency reserves for the Middle East situation and other matters, to address economic impacts such as high energy prices. This accounts for 80% of the total.
An additional approximately 513.5 billion yen is allocated as general contingency reserves with no specified purpose. The budget also includes about 100 billion yen in "key support local allocation grants" to support households using liquefied petroleum gas (LPG).
The funding will be fully secured through the issuance of deficit bonds in fiscal 2026. However, considering factors such as an increase in non-tax revenue, the planned issuance of deficit bonds for fiscal 2025 will be reduced by approximately 3 trillion yen, so the total amount of government bond issuance over the two fiscal years is expected to remain unchanged.
Chief Cabinet Secretary Minoru Kihara stated at a press conference: "Given the uncertain situation in the Middle East, in order to prevent inconvenience to the lives and economic activities of the people, and to be able to respond promptly when necessary, from the perspective of risk minimization, this allocation is to ensure thorough preparation in terms of funding."
Regarding the funding source, Kihara added: "Although it will be fully covered by borrowing, by adjusting within the overall planned government bond issuance, it is expected that we can respond without increasing the total issuance amount in the market. Therefore, we hope to implement this without affecting the government bond market. We will do our utmost to ensure the budget is passed quickly."
However, Reuters analysis points out that the Japanese government had just declared a successful transition to a primary balance surplus in the initial budget at the beginning of the year. With the introduction of this supplementary budget, the primary balance is expected to fall back into deficit.
Furthermore, the end of the Middle East conflict remains uncertain, and pressure on expenditure is likely to continue to rise. If the market once again doubts the fiscal discipline of the Ishiba cabinet, it could further push up Japanese government bond yields, triggering a chain of economic effects. (Editor: Li Jing / Supervisor: Lu Yingzi) 1150603
According to reports from NHK, the Asahi Shimbun, and the Yomiuri Shimbun, 2.5 trillion yen (approximately NT$500 billion) will be allocated as contingency reserves for the Middle East situation and other matters, to address economic impacts such as high energy prices. This accounts for 80% of the total.
An additional approximately 513.5 billion yen is allocated as general contingency reserves with no specified purpose. The budget also includes about 100 billion yen in "key support local allocation grants" to support households using liquefied petroleum gas (LPG).
The funding will be fully secured through the issuance of deficit bonds in fiscal 2026. However, considering factors such as an increase in non-tax revenue, the planned issuance of deficit bonds for fiscal 2025 will be reduced by approximately 3 trillion yen, so the total amount of government bond issuance over the two fiscal years is expected to remain unchanged.
Chief Cabinet Secretary Minoru Kihara stated at a press conference: "Given the uncertain situation in the Middle East, in order to prevent inconvenience to the lives and economic activities of the people, and to be able to respond promptly when necessary, from the perspective of risk minimization, this allocation is to ensure thorough preparation in terms of funding."
Regarding the funding source, Kihara added: "Although it will be fully covered by borrowing, by adjusting within the overall planned government bond issuance, it is expected that we can respond without increasing the total issuance amount in the market. Therefore, we hope to implement this without affecting the government bond market. We will do our utmost to ensure the budget is passed quickly."
However, Reuters analysis points out that the Japanese government had just declared a successful transition to a primary balance surplus in the initial budget at the beginning of the year. With the introduction of this supplementary budget, the primary balance is expected to fall back into deficit.
Furthermore, the end of the Middle East conflict remains uncertain, and pressure on expenditure is likely to continue to rise. If the market once again doubts the fiscal discipline of the Ishiba cabinet, it could further push up Japanese government bond yields, triggering a chain of economic effects. (Editor: Li Jing / Supervisor: Lu Yingzi) 1150603