Japan Targets 40 Trillion Yen in New Bond Issuance for Fiscal Year 2027
Japan's government plans to cap new bond issuance at 40 trillion yen for fiscal year 2027, Prime Minister Sanae Takaichi said in an interview with the Yomiuri newspaper. This target is equivalent to the fiscal 2025 budget and far larger than the planned 32.7 trillion yen new debt issuance for the current fiscal 2026 budget.
Takaichi's government aims to incorporate supplementary budgets into the initial budget, which could inflate headline expenditure in the initial budget. The Prime Minister also mentioned that the government could tap foreign exchange reserves to fund her plan to slash the consumption tax on food, a move that creates a revenue shortfall of roughly 5 trillion yen annually.
According to Toru Suehiro, chief economist at Daiwa Securities, if Prime Minister Takaichi has in mind the roughly 40.3 trillion yen in new bond issuance after the fiscal 2025 budget, her target may be viewed as somewhat expansionary.