Japan's Supplementary Budget of 115 Trillion Yen for High Inflation Response and Defense Enhancement

The Japanese government decided on an additional supplementary budget at the Cabinet meeting on the 10th to address high inflation and foster the semiconductor industry, according to reports by Kyodo News and Nihon Keizai Shimbun (Nikkei).

According to the reports, the supplementary budget amounts to 13.1992 trillion yen (approximately 115.1 trillion won), of which 8.875 trillion yen (approximately 77.4 trillion won) will be financed through government bonds.

Most of the supplementary budget will be allocated to economic measures. Support payments of 70,000 yen (approximately 610,000 won) will be given to low-income households that do not benefit from tax cuts, and 1.854 trillion yen (approximately 16.2 trillion won) will be spent on subsidies for electricity and gas bills. Additionally, 1.5445 trillion yen (approximately 13.5 trillion won) has been allocated to expand semiconductor production facilities. Budgets have also been prepared for replacing student devices, raising caregiver salaries, supporting large-scale investments by medium-sized and small businesses, and aiding developing countries.

Defense spending has been allocated 813 billion yen (approximately 7.1 trillion won). It will be used for early procurement of domestic artillery missiles and ammunition, and for relocating the land-based takeoff and landing training sites for US Navy aircraft carrier-based aircraft. Kyodo News reported that "this supplementary budget represents the largest-ever defense budget."

If the supplementary budget passes as is, the total expenditure of the Japanese government for the 2023 fiscal year (April 2023 to March 2024) will increase to 127.5804 trillion yen (approximately 1,112 trillion won), and the issuance of new government bonds will also rise to 44.498 trillion yen (approximately 388 trillion won).

Chief Cabinet Secretary Matsuno Hirokazu explained at a press conference that day, "We have gathered the necessary policies to protect the lives of the people from rapid price increases and to strengthen the flow of structural wage increases and investment expansion." Regarding concerns about fiscal deterioration due to large-scale government bond issuance, he said, "We will strive for sustained economic growth and fiscal reform."