The first economic stimulus plan unveiled after Takashi Saito took office may exceed 13.9 trillion yen!

Japan's newly appointed Prime Minister Sanae Takaichi is working on her first major economic initiative since taking office. An economic stimulus plan aimed at addressing inflation is being prepared, with a scale that may exceed 13.9 trillion yen, focusing on three pillars: tackling inflation, investing in growth industries, and national security.

According to media reports on the 22nd, Takaichi has ordered the formulation of a package of new economic measures aimed at alleviating the burden of inflation on households and businesses. This is her first significant economic action since she became Japan's first female prime minister on Tuesday. The plan will be funded through the preparation of a supplementary budget.

The specific measures in the plan show a tendency for precise policy implementation, including subsidies for winter electricity and gas costs, grants to alleviate regional price pressures, and incentives for small and medium-sized enterprises to raise wages and increase capital investment. For investors, this indicates that the government prefers targeted support measures rather than large-scale cash distributions, which failed to gain public support in the nationwide elections in July.

According to media reports citing informed government sources, the scale of the plan may exceed last year's 13.9 trillion yen (approximately USD 92.19 billion) and could be announced as early as next month, although the exact scale is still being finalized. The focus of the plan is to alleviate the cost of living pressures on the public while also addressing Japan's long-term structural issues.

Locking in on the "Three Pillars"

Based on official orders and information from sources, this economic stimulus plan will revolve around three clear core areas.

First, and the most urgent pillar, is addressing inflation and rising living costs. Specific measures include direct subsidies for household energy bills, grants to local governments to cope with price pressures, and incentives for small and medium-sized enterprises to raise wages.

Second, the plan will heavily invest in strategic industries that can drive future economic growth. The identified fields include artificial intelligence and semiconductors, aimed at enhancing Japan's position in global technological competition.

The third pillar is strengthening economic security and national defense. This part includes not only enhancing the resilience of supply chains for critical goods but also measures to address U.S. tariff actions. This includes implementing a previously announced investment plan with the U.S., in which Japan commits to investing USD 55 billion in key U.S. industries. Analysts believe that this investment tool may become a topic of discussion during U.S. President Trump's upcoming visit to Japan.

Scale Exceeding 13.9 Trillion Yen, Scale and Funding Sources Undetermined

Although the total scale of the plan is of great interest to the market, specific figures and funding sources remain uncertain.

According to media reports, the scale of the new plan "may exceed" last year's level of 13.9 trillion yen. However, Takaichi did not specify a concrete amount when issuing the order, nor did she indicate whether it would require issuing bonds to finance the plan.

Minoru Kiuchi, the Minister responsible for coordinating the plan, stated to the media on Wednesday that exploring diverse funding sources is very important. It has been reported that funding will be arranged through the preparation of a supplementary budget

Seeking Balance Between Inflation and Debt

The introduction of this economic stimulus plan comes at a delicate policy balancing point for the Japanese economy. On one hand, the consumer inflation rate has remained at or above the Bank of Japan's target level of 2% for three consecutive years, continuously squeezing household purchasing power; on the other hand, in response to inflation, the central bank has been gradually raising interest rates, which directly increases the government's borrowing costs.

For Sanna Takashita, this poses a severe challenge. She needs to address Japan's massive public debt issue while supporting the economy and fulfilling campaign promises. Takashita is known for advocating active monetary and fiscal stimulus, but her stance has recently softened, shifting to a commitment to implement "expansionary yet responsible fiscal policy."

Takashita herself stated on Tuesday that she hopes inflation will be driven by rising wages rather than cost-push factors. Minoru Kiuchi also emphasized:

"It is crucial for the Bank of Japan and the government to be in sync. Properly managing monetary policy to achieve strong economic growth and price stability is key."