Japan gov't to use 1.1 tril. yen of reserves to finance gasoline subsidies

On Friday, Japan's Cabinet allocated roughly 1.1 trillion yen ($7 billion) from the government's reserves to fund a subsidy program intended to maintain gasoline prices at around 170 yen per liter. This decision was made in response to the ongoing conflict in the Middle East, which has caused a surge in fuel costs. Prime Minister Sanae Takaichi had previously announced that the government would continue the gasoline and fuel subsidies, albeit gradually reducing them due to concerns about the financial burden.

The subsidies are set to limit gasoline prices at around 170 yen per liter, with the target price expected to increase by 5 yen each month beginning in December, leading up to spring. As of the end of September, the balance of the fund stood at approximately 560 billion yen. In fiscal 2026, the government secured a 2.5 trillion yen contingency reserve to address the potential economic impact of the recent U.S.-Iran war, which began in late February.

Following Friday's spending decision, the remaining balance of the fund is projected to decrease to 735.8 billion yen.