PM Takaichi Weighs Fiscal Measures, Including Summer Rate Aid

2026-05-18

Prime Minister Sanae Takaichi said on the 18th that the government has begun considering fiscal measures with an eye toward compiling a supplementary budget for fiscal 2026. A decision on whether to draw up the budget will be made within the month. At a government-ruling coalition liaison meeting held that day at the Prime Minister's Office, she asked the ruling parties to consider subsidies for summer electricity and gas bills.

Decision on Supplementary Budget This Month

The prime minister, citing the prolonged turmoil in the Middle East, said, "We will make appropriate judgments so that economic activity and people's lives are not disrupted, and respond in a timely manner as needed." She further explained, "I instructed bureaucrats before the Golden Week holidays and Finance Minister Satsuki Katayama last week to consider financial measures, including the compilation of a supplementary budget," and emphasized, "From the perspective of minimizing risks, we will make every possible preparation."

Request for Summer Bill Support

There is a view that the subsidy launched in March to hold down prices such as gasoline will see its funding source, a dedicated fund, run dry as early as June. Support for electricity and gas bills is also expected to resume with July-to-September usage in mind, and there are assumptions that the 1 trillion yen reserve fund in the FY2026 budget may not be enough to cover it.

The prime minister said of electricity and gas bills, "We will provide support from July to September, when usage increases in the summer, so that bills will fall below last summer's levels." She instructed the policy chiefs of the Liberal Democratic Party and Nippon Ishin no Kai to work out specific measures.

Caution Also Within the Government

At the meeting, Nippon Ishin no Kai leader Hirofumi Yoshimura, in addition to easing the burden of electricity and gas bills, raised "building a benefit system that utilizes digital infrastructure." He also mentioned measures to support businesses' cash flow and continuity.

After the meeting, the prime minister told reporters about funding for the supplementary budget plan, "It is important, of course, to control special deficit-financing bonds, and we will make decisions including that point." On the 14th, LDP Upper House caucus chief Seiji Matsuyama had referred to the need to deliberate the FY2026 supplementary budget bill in the current Diet session, which runs through July 17. The prime minister has said so far that she does not believe the situation requires an immediate supplementary budget, and has been assessing the impact of the de facto closure of the Strait of Hormuz. The government is also moving ahead with steps such as securing alternative crude oil suppliers and releasing national reserves.

Meanwhile, negotiations between the United States and Iran remain difficult, raising fears that the economic impact could drag on. Opposition parties such as the Center Reform Alliance and the Democratic Party for the People are calling for cash handouts to low-income households and the creation of subsidies for companies, but some within the government remain cautious about formulating new economic measures.

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