Japan will not increase the issuance of calendar year national bonds to fund supplementary budgets.

Japanese Prime Minister Sanae Takichi stated that the government will fund the supplementary budget by not increasing the size of annual issuance of government bonds, in order to alleviate concerns about the government's fiscal situation in the market. Takichi mentioned that the supplementary budget may slightly exceed 30 trillion yen, which is consistent with what Finance Minister Okatsuki Koga implied last Friday. At the time of Takichi's remarks, the market remained cautious about expanding fiscal spending, leading to a sell-off of Japanese government bonds. Additionally, global bond yields rose due to concerns about war-related inflation. On Monday, the yield on Japan's 10-year government bonds was reported at 2.69%, slightly lower than recent highs, as the market hoped for easing tensions in the Middle East. Takichi mentioned that considering higher-than-expected tax revenues and other unused expenditures, some of the bonds originally planned to be issued in the previous fiscal year's budget may be canceled, helping to offset the need for additional debt issuance. Japan is currently reviewing income and expenditure data from the previous fiscal year in preparation for a settlement in June. The government stated that the purpose of the supplementary budget is to mitigate the impact of the Iran war, not to stimulate the economy, with fuel subsidies expected to be a key component.