(Bloomberg) -- Japan’s Prime Minister Shigeru Ishiba instructed his cabinet on Friday to draw up a package of economic measures in a show of support to inflation-hit voters ahead of a general election.
The measures will aim to reduce the impact of high prices and support growth, and will include cash handouts for low-income households and regional economies. To help fund 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 off with some of the lowest support rates seen in recent years for a new administration. He will need to build momentum for his government quickly to maintain or extend the ruling party’s majority in parliament and shore up his leadership.
Finance Minister Katsunobu Kato said Friday morning that the concerns reflected in the latest opinion polls need to be addressed. He didn’t clarify if the size of the budget or the specific measures would be disclosed before the election.
Extra budgets aimed at propping up the economy and rallying public support are an almost annual occurrence in Japan despite the extra burden they place on the nation’s large debt load. A package of economic measures was already expected this autumn as Ishiba’s predecessor Fumio Kishida had promised additional measures were in the pipeline for later in the year.
Recent packages have featured measures to reduce the impact of high energy prices on households such as subsidies for electricity bills.
Ishiba said that to defeat deflation, a concentrated effort is needed in the next three years to make sure that a virtuous cycle of growth and redistribution is secured, according to a document outlining the measures released by the Cabinet Office.
Beyond price relief efforts, the government will also try to help households become more energy efficient, and support regional economies, according to the document. The package is also set to include support for the natural disaster-hit Noto region, financed largely through a reserve fund.
Economic Revitalization Minister Ryosei Akazawa will lead efforts to put the package together, cooperating with the ruling party, according to Ishiba.
While the size of packages to shore up the economy has shrunk since the peak of the pandemic, Japanese policymakers have continued to resort to them, adding to Japan’s massive debt load. Japan’s debt reached 255% of its gross domestic product in 2024, according to the International Monetary Fund.
Japan’s annual debt servicing already accounts for around a quarter of the regular annual budget, with those costs set to rise as interest rates go up.
--With assistance from Yoshiaki Nohara.
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