FY2026 Supplementary Budget and Defense Spending Discussions

Mizuho analyzes Japan's potential FY2026 supplementary budget for energy subsidies and ongoing discussions to increase defense spending amid Middle East turmoil.

Key Takeaways

• 1.The Japanese government is considering a supplementary budget for FY2026, with a decision likely by Prime Minister Sanae Takaichi around the G7 Summit in June.
• 2.Potential energy subsidies for electricity, gas, and gasoline could push the supplementary budget to several trillion yen.
• 3.Discussions regarding increased defense spending in national security documents are unlikely to include specific GDP ratio targets, potentially limiting immediate market fiscal concerns.

Table of Contents

• Government considering FY2026 supplementary budget; discussions on increasing defense spending
• Implications of revisions to three key national security documents and increased defense spending for public finances
• Important Disclosure Information
• Analyst Certification
• Disclaimer

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