Japan May Issue Fresh Debt to Fund Emergency Budget

Japan’s government is likely to issue fresh debt to help fund a planned supplementary budget aimed at cushioning the economic impact of the Middle East conflict, a government source familiar with the discussions told Reuters, Tamiyuki Kihara and Leika Kihara reported.

Japan weighs additional borrowing to finance emergency measures as energy prices surge. (Photo: Kakidai, Wikimedia Commons)

Additional debt issuance could further strain Japan’s already fragile fiscal position and accelerate increases in long-term interest rates.

Concerns over government finances pushed the benchmark 10-year Japanese government bond (JGB) yield to 2.8% on Monday, its highest level since October 1996, while the 30-year yield reached a record high.

Prime Minister Sanae Takaichi is expected to instruct officials to consider a supplementary budget, though the size of the package has yet to be determined.

Sources previously told Reuters that the government was considering measures to ease household energy costs, including subsidies for gasoline and utility bills.