The Japanese government recently submitted to Parliament a draft additional budget of 13.9 trillion yen ($92.7 billion). This budget is aimed at supporting a new economic strategy to ease the financial burden caused by inflation, especially for households.

The approved budget will play an important role in the economic package totaling 39 trillion yen. This package includes subsidies designed to reduce energy costs and provide cash benefits to low-income households as inflation continues to affect consumer behavior. Finance Minister Katsunobu Kato stressed the need to approve this budget as soon as possible in order to increase the sense of security of citizens.

It is proposed to raise about 6.7 trillion yen through the issuance of new bonds, which is half of the additional budget. This financing strategy has raised concerns about the overall financial situation of Japan, which has faced difficulties compared to other advanced economies. The deterioration of the economic situation leads to the fact that consumer spending, which makes a significant contribution to the gross domestic product (GDP) of the country, may decrease even more.

Budget Allocations

The supplementary budget includes several critical expenditures:

• Inflation Relief: 3.4 trillion yen
• Economic Stimulus: 5.8 trillion yen
  • This part of the budget focuses on boosting sectors like artificial intelligence and semiconductors.
• Public Security and Safety: 4.8 trillion yen

This strategic allocation aims to improve both immediate living conditions and long-term economic stability.

There have been obstacles on the way to this additional budget. Prime Minister Shigeru Ishiba’s Liberal Democratic Party, along with the Komeito Party, lost their majority in the House of Representatives during the recent general elections. This change causes uncertainty regarding the smooth passage of the proposed budget at the current extraordinary session of Parliament, which ends on December 21.

In an effort to gain the support of opposition parties, the ruling coalition agreed to raise the income tax exemption threshold from the current level of 1.03 million yen. However, the Constitutional Democratic Party of Japan, the largest opposition group, has expressed concern about some of the allocations in the supplementary budget. They argue that many of these costs are not urgent and should be included in the regular budget for the next fiscal year.