Japan’s lower house of parliament has approved a supplementary budget of $118 billion to fund Prime Minister Sanae Takaichi’s stimulus package, which includes measures to combat inflation and boost the country’s military. The 18.3‑trillion‑yen budget passed with the support of three independent lawmakers who agreed to work with the ruling Liberal Democratic Party (LDP), giving Takaichi the legislative majority she needed.
The budget will now move to the upper house, where Takaichi’s coalition still lacks a majority. However, two opposition parties—the Democratic Party for the People and the LDP’s former partner Komeito—have pledged to support the budget, making its passage next week likely. If approved, the stimulus package will provide energy subsidies, cash handouts, and investment incentives in key fields such as semiconductors and artificial intelligence, as well as allocate funds for expanded defense spending in response to increased Chinese military activity in the region.
Takaichi has stated that her government will implement “strategic fiscal spending to protect people’s livelihoods and build a strong economy.” More than 60 % of the planned spending will be financed through new government bonds, raising concerns about Japan’s fiscal health. The country already has the highest debt‑to‑GDP ratio among major economies, projected to reach 232.7 % this year, according to the International Monetary Fund. The promotion of large‑scale government spending has pushed up long‑term interest rates, prompting investors to sell Japanese government bonds.
Despite these fiscal worries, Takaichi remains popular among voters, with her cabinet approval rating above 60 % in various media polls. The budget’s passage is a significant development for a government that lost its legislative majority last year; the LDP’s coalition with the Japan Innovation Party now commands 233 of the 465 seats in the lower house. The approval is expected to have a substantial impact on Japan’s economy, as the stimulus aims to boost growth and mitigate inflation. With the upper house set to vote next week, attention will focus on the outcome and its implications for Japan’s economic future.
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