Preventing Economic Collapse: Japan Allocates Rp 339 Trillion to Support Citizens
The Japanese government has officially approved a supplementary budget of 3.1135 trillion yen (Rp 339.15 trillion) to assist households struggling with the surge in daily living costs resulting from the impacts of the US-Iran conflict. This emergency measure has been taken under the leadership of Prime Minister Sanae Takaichi to dampen widening economic shocks.
The massive fund is reportedly earmarked specifically to ease the burden of petrol, electricity, and gas costs for the public. This supplementary budget was decided during a cabinet meeting and is expected to be ratified as early as this Friday in parliament, which is currently dominated by the ruling Liberal Democratic Party and Taka0e9ichi’s allies.
Quoting an AFP report, government spokesperson Minoru Kihara explained during a press conference that the cabinet has agreed to release these funds. The amount includes 2.5 trillion yen (Rp 280 trillion) specifically established as an emergency reserve fund to anticipate the situation in the Middle East.
During the press conference, Kihara detailed the primary reasons behind the allocation of this massive budget amidst ongoing global uncertainty. “Amidst the continuous uncertainty of the situation in the Middle East, we have formulated this budget from a risk-minimisation perspective,” Kihara stated on Wednesday (03/06/2026) local time.
Furthermore, Kihara ensured that this financial decision was made to maintain the nation’s economic readiness and prevent the paralysis of daily life. “This budget will allow for strong financial preparedness, and the government will closely monitor future price trends to ensure that people’s daily lives and economic activities are not disrupted,” Kihara added.
The impact of the Iran conflict has reportedly triggered shortages of several raw materials in Japan, as experienced by leading potato chip manufacturer Calbee, which was forced to change its signature orange-yellow packaging to grey due to an ink shortage. Additionally, the Bank of Japan has raised its inflation forecasts and cut its economic growth projections after the conflict caused global oil prices to soar.
Despite the difficult situation, Prime Minister Takaichi provided some positive news regarding the supply of essential energy commodities within the country. “The government expects to secure a stable oil supply until next spring,” Tallyichi stated.
Takaichi also added that the government has successfully identified alternative sources outside the Middle East to keep industrial operations running. “Alternative supplies for nafta, an oil by-product used in various industrial sectors, from outside the Middle East have recovered to more than 80 per cent of previous levels,” she added.
Regarding the financing scheme, Kihara explained that this supplementary budget will be covered using deficit-financing bonds. However, he emphasised that the total issuance of bonds will not increase, as part of the debt authorised in the previous fiscal year will not be issued due to expected tax revenues.