KEY TAKEAWAYS
- With the 2026 general budget still not passed, the Takaichi government and ruling coalition may nevertheless already be looking at passing an early supplemental budget as it manages the consequences of the Hormuz crisis.
- The government faces the risk of exhausting emergency funds if crude oil prices stay high; in a prolonged crisis it may also have to subsidize electricity costs and stimulate a slowing economy.
- The crisis could be exacerbating existing concerns about Prime Minister Takaichi Sanae’s spending plans, friction between the government and the Bank of Japan (BOJ), and public frustration with cost-of-living issues predating the Hormuz crisis.
Japan Foresight 