By Megumi Fujikawa


TOKYO--Japan's finance ministry plans to boost government bond issuance by $75 billion to fund an economic stimulus package, potentially stoking concerns about the nation's fiscal health.

Prime Minister Sanae Takaichi's cabinet on Friday approved a draft supplementary budget for the fiscal year ending March 2026 that is worth 18.303 trillion yen, or about $117.10 billion. The government now plans to issue an additional 11.696 trillion yen of bonds, including increases in issuance of two- and five-year notes.

The announcement came a week after Takaichi unveiled a substantial economic stimulus package that includes measures to help households bear the burden of rising living costs.

Japanese government bond yields have been rising since Takaichi took office last month, with her preference for expansive economic policies triggering concerns that the country could stray from the path of fiscal discipline.

The yield on benchmark 10-year JGBs hit 1.835% earlier this month--a peak not seen since June 2008. Super-long bond yields, which are sensitive to fiscal concerns, have also hit multi-year highs. The 20-year yield has reached 2.855%, a level last scaled in 1999.

The Takaichi administration promotes "responsible proactive fiscal policy," but the prime minister has said that doesn't mean reckless spending.

"I believe that without creating a growing economy, our national finances will never be sound," Takaichi said this week, emphasizing that the JGB issuance for the current fiscal year would be lower than that of last year.

Newly-issued bonds will amount to 40.343 trillion yen this fiscal year after Friday's announcement. That is lower than the 42.139 trillion yen seen in the previous year.

Economists say markets will likely remain sensitive to any signals on government spending.

There is a growing risk that the bond and foreign-exchange markets may overreact to Takaichi's comments on topics such as increased defense spending, said Takahide Kiuchi, an economist at Nomura Research Institute who was formerly on the Bank of Japan's policy board.

"Financial markets have not moved this much in recent years due to concerns over worsening fiscal health, so it would not be wrong to call this a warning bell," Kiuchi said.


Write to Megumi Fujikawa at megumi.fujikawa@wsj.com


(END) Dow Jones Newswires

11-28-25 0255ET