Japan's preparation of a supplementary budget has sparked concerns about financial pressure.

The Japanese government announced on the 25th that it will compile a supplementary budget to address the impact of rising energy prices in the background of prolonged Middle East conflict. This plan has raised concerns about financial pressure. The supplementary budget will be funded by issuing additional deficit bonds, and will be used for electricity and gas subsidies, continuation of gasoline price subsidies, and providing subsidies to liquefied petroleum gas users through local governments, with a scale slightly exceeding 3 trillion yen. The plan is expected to be submitted to the Diet for deliberation as early as next week. Due to Japan's high dependence on Middle East oil, the conflict in the Middle East has pushed international oil prices higher, prompting the Japanese government to start oil price subsidy measures in March. Takahide Kiuchi, a researcher at Nomura Research Institute in Japan, said that calculations show that the Japanese government has spent approximately 490 billion yen on gasoline subsidies in the past month. The large-scale increase in fiscal expenditure puts pressure on fiscal operations and to some extent triggers market reactions such as a rise in long-term interest rates and a weak yen. There are different opinions within the ruling party, the Liberal Democratic Party, regarding the gasoline subsidy policy. The party's second-in-command, Secretary-General Toshihiro Nikai, recently stated that the relevant measures impose a heavy burden on finance and require careful study. Senior LDP member Mitsuhide Iwata also stated that it is unrealistic to maintain the subsidies in the long term, and it is necessary to gradually reduce the scale of subsidies. Japan's fiscal year 2026 budget has already reached 122.3 trillion yen, far exceeding the 115.2 trillion yen budget for fiscal year 2025. Therefore, the Japanese government's preparation of a supplementary budget on top of this can be considered as "adding insult to injury." Due to concerns about worsening fiscal conditions, the yield on Japan's 10-year government bonds recently rose to 2.8%, reaching a new high since October 1996.