Japan aims to cap FY27 new bond issuance at 40 trillion yen, PM says in Yomiuri interview

Japan's government plans to limit new bond issuance to around 40 trillion yen for the fiscal year ending in 2027, according to Prime Minister Sanae Takaichi in an interview with the Yomiuri newspaper. This comes as government ministry and agency requests for the next fiscal year are expected to exceed 130 trillion yen, setting a record for the fourth consecutive year.

Takaichi's government intends to incorporate expenses previously financed through supplementary budgets into the initial budget, which could increase headline expenditure. The 40 trillion yen issuance is comparable to the fiscal 2025 budget but significantly higher than the planned 32.7 trillion yen new debt issuance for the current fiscal year.

Takaichi suggested the possibility of using Japan's $1.3 trillion foreign exchange reserves for future yen intervention to fund her plan to reduce the consumption tax on food, addressing the annual revenue shortfall of around 5 trillion yen caused by the tax cut.