Foreign media reports: The Japanese government’s fuel subsidies are costing about 600 billion yen per month, with funds potentially running out in three months at the latest.

Based on reports from Japan’s The Mainichi Shimbun and the UK’s Reuters on April 7, against the backdrop of a sharp surge in oil prices, Japanese Prime Minister Shina Sori still hopes to push ahead with economic activity, but some Japanese government officials are anxious about the severe state of public finances. A source in the Japanese government told Reuters that Japan’s fuel subsidies cost the government about 600 billion yen per month (about 26 billion yuan RMB), and that the funds will likely run out within up to three months.

According to the report, to avoid disrupting economic activity, Sori has repeatedly issued optimistic messages on social media to reassure the Japanese public. However, analysts—including people in the Liberal Democratic Party and within the Japanese government—said the current situation is very serious, and they recommend limiting the use of fuel through policy measures.

On April 6, Adaya Yoshi, a Liberal Democratic Party member of the House of Councillors, urged Sori to “take the crisis seriously” in a speech in the Diet. He told Sori, “I hope you can take the crisis seriously, recognize that the situation may become prolonged. When assessing risk, take the time factor into account. The era in which it was possible to import large quantities of oil from the Middle East cheaply has ended. It is not feasible to use subsidies to suppress (oil prices). This will lead to higher yields on government bonds, a weaker yen, and an acceleration of inflation.”

A source in the Japanese government told Reuters that Japan’s fuel subsidies cost about 600 billion yen per month (about 26 billion yuan RMB). The funds and contingency reserves for this subsidy amount to 1 trillion yen; even when including the contingency reserves in the 2026 budget proposal that is about to be approved, the total would exceed 2 trillion yen. This means the funds could run out within up to three months.

The source also noted that, given the already very severe situation, the coming summer heat wave will be “adding insult to injury,” and fuel and electricity subsidies will further strain public finances. Against the backdrop of rising liquefied natural gas prices, the combined spending on fuel subsidies and electricity subsidies could reach 900 billion yen per month.

Regarding the current situation, Nambu Shi, a senior researcher at the Norinchukin Research Institute, told Reuters that, in the face of high oil prices, ordinary Japanese people have already started to conserve gasoline. Even if the Japanese government calls on people to do so, it will not have a very noticeable effect. He believes the government needs to introduce mandatory fuel restriction policies. Nambu Shi also said that if crude oil prices continue to rise, government funds may run out even faster. He predicts that the Japanese government may issue government bonds to cover the funding gap, but this would further weaken the yen.

Source of this article: Global Times

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