Japan's House of Representatives, the lower chamber of the Diet, approved the government's supplementary budget bill for fiscal year 2025 on Thursday, December 11, 2025. This significant legislative action finances the first comprehensive economic policy package under the administration of Prime Minister Sanae Takaichi, who assumed office in October 2025. The budget, totaling 18,303.4 billion yen (approximately $117 billion), now proceeds to the House of Councillors for final deliberations.
Key Provisions of the Supplementary Budget
The newly approved supplementary budget is a cornerstone of Prime Minister Takaichi's economic strategy, emphasizing a 'responsible and proactive fiscal policy'. It allocates substantial funds across various sectors, aiming to address pressing economic challenges and bolster national capabilities. Key measures include:
- An additional child allowance of 20,000 yen per child, a proposal championed by the Komeito party.
- The abolition of the provisional gasoline tax surcharge, a measure advocated by the Democratic Party for the People (DPFP).
- Measures designed to ease the impact of rising prices, such as support for household electricity and gas bills.
- Significant investment in growth sectors and crisis management, alongside efforts to strengthen Japan's diplomatic and defense capabilities.
Notably, the budget includes an additional 1.1 trillion yen for defense spending, bringing Japan's total defense expenditure for fiscal year 2025 to approximately 11 trillion yen, which is poised to exceed 2% of its GDP. This marks a substantial increase and reflects the Takaichi administration's focus on national security.
Funding and Political Landscape
The substantial budget will be financed primarily through the issuance of new Japanese government bonds, accounting for more than 60% of the extra budget's revenue. This approach has raised concerns among some regarding Japan's fiscal health, with the yen experiencing volatility and long-term interest rates rising.
The bill passed the Lower House with a majority vote, securing support from the ruling Liberal Democratic Party (LDP) and its coalition partner, the Japan Innovation Party (Nippon Ishin no Kai). Crucially, it also garnered backing from opposition parties Democratic Party for the People (DPFP) and Komeito, following the incorporation of their policy proposals into the budget.
Next Steps and Economic Context
With the Lower House approval, the supplementary budget bill now moves to the House of Councillors, the upper chamber of the Diet, for further deliberation. It is widely anticipated to be enacted shortly, potentially as early as Tuesday, December 16, 2025, before the conclusion of the current extraordinary Diet session.
This economic package represents Prime Minister Takaichi's initial major initiative since becoming Japan's first female prime minister in October. Her administration aims to revive economic growth, stabilize household finances, and counter global economic pressures, including addressing inflation and supporting key industries through targeted subsidies and tax relief.
5 Comments
eliphas
PM Takaichi's ambition to revive economic growth is commendable, and some targeted measures like investment in growth sectors are positive. Yet, the sheer scale of borrowing and potential for inflation could undermine these efforts if not managed carefully.
anubis
Boosting defense capabilities is understandable given global tensions, but a 2% GDP target is a significant increase that needs careful oversight to ensure funds are used efficiently and not at the expense of other critical areas. The fiscal implications are considerable.
eliphas
This budget ignores the long-term impact of inflation. Very short-sighted.
Michelangelo
The abolition of the gasoline tax surcharge offers immediate relief for drivers, which is helpful. However, it's a small band-aid on a much larger economic wound, and the overall budget's impact on yen volatility and interest rates could negate these minor benefits.
KittyKat
Finally, real action on the economy! This budget is a strong start.