Prime Minister Sanae Takaichi has firmly stated her intention to minimize the issuance of deficit-covering government bonds as part of a supplementary budget aimed at mitigating the economic impact of the ongoing Middle East conflict. During a series of Diet debates on May 20, Takaichi emphasized the importance of safeguarding citizens’ livelihoods and economic activities without resorting to excessive borrowing. While the specifics of the supplementary budget for fiscal 2026 remain under discussion, the prime minister outlined that surplus funds from fiscal settlements and other sources would soon become available to support the plan.
Despite her initial resistance to an extra budget, Takaichi recently instructed Finance Minister Satsuki Katayama to explore the development of a supplementary budget, as announced during a government-ruling coalition meeting on May 18. Opposition leader Junya Ogawa of the Centrist Reform Alliance criticized the timing of her decision, suggesting that it was overdue. However, Takaichi dismissed these claims, asserting that her instructions were timely. In a debate with Yuichiro Tamaki of the Democratic Party for the People, she clarified that she had directed officials to investigate the possibility of a budget extension before the Golden Week holidays, contrary to her previous statements.
To alleviate the strain of increased crude oil prices, the government is maintaining substantial subsidies to cap the nationwide gasoline price at approximately 170 yen ($1.06) per liter. Tamaki advocated for these subsidies to be incorporated into the supplementary budget, alongside a phased approach to gradually increase the threshold for their activation. In response, Takaichi expressed a willingness to consider raising subsidy payments, acknowledging the strategic importance of Tamaki’s proposal.
Amid concerns of potential shortages due to the prolonged closure of the Strait of Hormuz, companies are proactively seeking alternatives. Calbee Inc., a snack food manufacturer, announced on May 12 its decision to switch to black and white packaging for 14 products, citing unstable printing ink supplies derived from naphtha. However, Takaichi’s administration maintains that there is a sufficient supply of naphtha, attributing the issue to supply-chain bottlenecks rather than an actual shortage. Industry Minister Ryosei Akazawa is leading efforts to address these challenges.
In her commitment to eliminate the consumption tax on food items, Takaichi reaffirmed her eagerness to present relevant legislation to the Diet, contingent upon the national council on social security’s anticipated interim report by summer. Throughout the debates, she reiterated her administration’s focus on strategic economic measures and the stability of essential supplies.