(Bloomberg) — Japanese Prime Minister Shigeru Ishiba on Friday instructed his cabinet to draw up a package of economic measures as a show of support for inflation-hit voters ahead of the general election.
Most read from Bloomberg
The measures aim to reduce the impact of high prices and support growth, and include providing cash to low-income households and regional economies. To help finance the package, top spokesman Yoshimasa Hayashi said the government will submit an additional budget to parliament after the Oct. 27 general election.
Ishiba’s government has started with one of the lowest support rates for a new government in recent years. He will need to quickly build momentum for his government to maintain or expand the ruling party’s majority in parliament and strengthen his leadership.
Finance Minister Katsunobu Kato said Friday morning that concerns raised by the latest opinion polls must be addressed. He did not clarify whether the size of the budget or specific measures would be announced before the elections.
Extra budgets aimed at supporting the economy and raising public support are an almost annual occurrence in Japan, despite the additional burden they place on the country’s large debt burden. A package of economic measures was already expected this fall, as Ishiba’s predecessor Fumio Kishida had promised that additional measures were planned for later this year.
Recent packages include measures to reduce the impact of high energy prices on households, such as subsidies for electricity bills.
Ishiba said beating deflation will require a concentrated effort over the next three years to ensure a virtuous cycle of growth and redistribution emerges, according to a document outlining measures released by the Cabinet Office.
In addition to price cuts, the government will also try to help households become more energy efficient and support regional economies, the document said. The package will also include support for the Noto region hit by natural disasters, largely financed through a reserve fund.
Economic Revitalization Minister Ryosei Akazawa will lead efforts to put together the package in coordination with the ruling party, Ishiba said.
Although the size of packages to support the economy has shrunk since the height of the pandemic, Japanese policymakers have continued to resort to these packages, adding to Japan’s massive debt burden. According to the International Monetary Fund, Japan’s debt reached 255% of gross domestic product in 2024.
Japan’s annual debt service already accounts for about a quarter of its regular annual budget, and these costs are expected to rise as interest rates rise.
–With help from Yoshiaki Nohara.
Most read from Bloomberg Businessweek
©2024 BloombergLP