KEY TAKEAWAYS
- The Takaichi government is now committed to passing a supplemental budget this Diet session as the costs of the Hormuz crisis continue to mount.
- The government faces a debate over how to fund the budget, what should be included, and how big it should be, as it has to balance between the need to provide short-term relief, the prime minister’s long-term fiscal goals, and the rise in bond yields.
- The need to pass a budget may also be leading the Liberal Democratic Party (LDP) to renew its push to add a coalition partner that would give it control of the upper house and stabilize the political situation in the midst of the ongoing global crisis.