Japan will issue deficit-financing bonds for a 3 trillion yen household support package, offset by higher tax revenue to avoid bond market impact.
Japan will compile an extra budget exceeding 3 trillion yen to subsidize household utility and gas bills from July to September. The plan includes 500 billion yen specifically for electricity and gas subsidies, funded by new deficit-financing bonds.
Prime Minister Sanae Takaichi stated the new debt will not affect bond markets, as it will be offset by higher tax and other revenue sources. The government aims to avoid increasing bond issuance on a calendar basis and secure oil supply until next spring.
The Japanese yen showed no immediate reaction to the announcement, with USD/JPY trading 0.2% higher. Markets had already priced in the debt decision following last week’s prior disclosure.