Japan’s government will seek to avoid excessive reliance on new debt issuance if it proceeds with a planned supplementary budget, Finance Minister Satsuki Katayama said on Friday, signaling a cautious fiscal stance as policymakers weigh measures to cushion rising economic pressures.
The comments come as Prime Minister Sanae Takaichi instructed her cabinet earlier this week to consider drafting an additional budget aimed at mitigating the economic impact of rising costs, which officials have linked in part to global instability and energy market disruptions stemming from the ongoing Iran conflict.
Domestic media reports have suggested that the proposed supplementary budget for the current fiscal year could be worth approximately 3 trillion yen, or about $18.9 billion, although final figures have not yet been confirmed by the government.
Katayama said she would not comment directly on the exact size of the planned budget, noting that further details would be provided by the prime minister. However, she acknowledged that the scale under discussion was broadly consistent with reported estimates.
“I should refrain from commenting on the exact size of the extra budget and I think the prime minister will explain more in detail on Monday. But the size is roughly around the level being talked about,” Katayama said during a press briefing.
The finance minister also emphasized that she had been instructed by the prime minister to minimize risks in designing policy responses to inflationary pressures affecting households and businesses.
She added that the government’s approach to risk management includes maintaining steady communication with financial markets in order to ensure policy credibility and stability.
“When we talk about minimizing risk, it includes keeping good dialogue with financial markets,” Katayama said. “As the prime minister has said, we will seek ways to avoid as much as possible relying on issuance of deficit-covering bonds.”
The remarks highlight the balancing act facing Japan’s government as it attempts to support economic activity while avoiding an increase in long-term fiscal vulnerabilities.
Japan already carries one of the highest levels of public debt among advanced economies, making debt-financed stimulus politically and economically sensitive.
The potential supplementary budget is expected to focus on easing the burden of higher living costs, particularly energy and essential goods, which have been affected by global supply pressures and geopolitical instability.
Officials are also expected to assess targeted support measures for households and businesses most exposed to inflation.
Prime Minister Takaichi’s request for a supplementary budget reflects growing concern within the government about the cumulative impact of external shocks on Japan’s domestic economy.
The administration has been under pressure to respond to rising prices while maintaining fiscal discipline and market confidence.
Katayama’s comments suggest that any new spending package will likely be structured with an emphasis on limiting additional borrowing, potentially through reallocation of existing resources and more targeted fiscal measures.
Financial markets are expected to closely watch the government’s final budget proposal for signals on Japan’s medium-term fiscal strategy, particularly its stance on deficit financing.
The discussion also comes at a time when central banks globally are grappling with inflationary pressures and uncertain energy market conditions, factors that continue to influence policy decisions in major economies.
Japan’s approach will therefore be seen as part of a broader global debate over how governments can support economic resilience without exacerbating debt sustainability risks.
Further details on the supplementary budget are expected to be outlined by Prime Minister Takaichi on Monday, when the government is likely to present its broader economic response strategy.
