Tokyo, November 18, 2025 – A ruling-party panel of lawmakers close to Japanese Prime Minister Sanae Takaichi proposed a supplementary budget exceeding 25 trillion yen ($161 billion) on Tuesday to fund the premier’s planned economic stimulus package. This proposal is nearly double last year’s extra budget of 13.9 trillion yen, reflecting growing political pressure to support households amid rising living costs.

Panel Advocates Expansionary Fiscal Policy

The proposal, presented in a meeting with Takaichi, emphasized that the government “should not hesitate to issue more bonds” to finance investments in growth sectors and strengthen crisis management measures. The panel consists of Liberal Democratic Party lawmakers who advocate for expansionary fiscal policy, aiming to stimulate economic growth while mitigating inflationary pressures on households.

Economic Revitalization Minister Minoru Kiuchi, a close adviser to Takaichi, also serves on the panel and has supported calls for increased government spending.

Stimulus Package to Address Rising Living Costs

Since taking office last month, Prime Minister Takaichi has pledged to implement a large-scale spending package to ease household burdens caused by inflation and boost investment across strategic sectors. While the administration has not specified the exact size of the stimulus, advisers have indicated that it could be significant enough to require additional debt issuance.

Market Reactions and Bond Yields

Expectations of a bigger-than-anticipated stimulus have pushed super-long Japanese government bond (JGB) yields to record highs, signaling market sensitivity to potential increases in government borrowing. Analysts note that the move could have wider implications for fiscal management, debt sustainability, and the outlook for Japanese monetary policy.

The supplementary budget proposal comes at a time of ongoing global economic uncertainty, with recent U.S. market volatility adding to investor caution. On Monday, the Dow Jones Industrial Average fell more than 1%, while the S&P 500 and Nasdaq lost just under 1%.

Outlook

If approved, the $161 billion supplementary budget will mark a significant fiscal expansion for Japan in 2025, reinforcing the government’s commitment to economic stimulus and support for households. Policymakers and market participants will closely monitor developments as Takaichi’s administration seeks to balance growth, inflation, and debt sustainability in the coming months.