Japan's cabinet approved a 3.1 trillion yen supplementary budget to protect households from Middle East-driven inflation, including a 2.5 trillion yen reserve fund to cap gasoline costs, Bloomberg News reported Wednesday.
To finance the package, the government will rely on new debt while keeping total bond issuance unchanged by canceling some previously authorized borrowing from the last fiscal year, the news wire said.
The extra budget, set to be submitted to parliament on Wednesday with passage expected by Friday, comes just weeks after the annual budget was approved, potentially heightening investor worries about Japan's spending trajectory, the publication said.
These fiscal anxieties have rattled the bond market, where benchmark 10-year yields recently touched a three-decade high and super-long yields hit record levels amid inflation and monetary policy concerns, the report said.
The package also highlights the deepening economic toll of prolonged Middle East turmoil on resource-poor Japan, which depends heavily on the region for crude oil imports used in fuel, plastics, and other petroleum-based goods, it added.
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