Japan plans to prepare a supplementary budget of 3 trillion yen to cope with the impact of rising energy prices.

The Japanese government announced on the 25th that it will compile a supplementary budget to deal with the rise in energy prices caused by the Middle East situation. However, this plan has raised concerns about fiscal pressure. The Japanese government stated that the compilation of the supplementary budget will be financed through the issuance of deficit government bonds, to be used for subsidies for electricity and gas, continued gasoline price subsidies, and subsidies provided by local governments to liquefied petroleum gas users, with a scale slightly exceeding 3 trillion yen. The plan is expected to be submitted to the Diet for deliberation as early as next week. Noriaki Kiuchi, a researcher at Nomura Comprehensive Research Institute in Japan, stated that calculations show that the Japanese government spent approximately 490 billion yen on gasoline subsidies in the past month. The large-scale increase in fiscal expenditure poses pressure on Japan's fiscal operations and to some extent triggers market reactions such as rising long-term interest rates and a weakening yen.