Japan PM looks to mull extra budget for FY 2026 to ease oil price impact

TOKYO, (UrduPoint / Pakistan Point News / WAM - 18th May, 2026) Japanese Prime Minister Sanae Takaichi said Monday her government will consider compiling an extra budget for fiscal 2026 to ease the impact of elevated crude oil prices, fueling renewed concerns about Japan's deteriorating finances as long-term bond yields move at nearly 30-year highs, Kyodo news reported.

The size of the supplementary budget has come under scrutiny after a record 122.31 trillion Yen ($770 billion) budget was enacted for the year starting April, underscoring Japan's heavy reliance on debt and reflecting Takaichi's stance of pursuing expansionary spending to spur economic growth.

"We will make decisions appropriately and respond timely as needed so that economic activities and people's lives are not disrupted" due to the middle East situation, Takaichi told a liaison meeting of the government and the ruling parties at her office.

Given surging crude oil prices, the government has set aside over 1 trillion yen for the gasoline price subsidies, restarted in mid-March, including reserve funds in the fiscal 2025 budget. But the amount fell to around 980 billion yen by the end of April.