Historic Budget Revision: Japan Innovation Party Backs New Spending Plan

The Japan Innovation Party supports revisions to Japan's 115 trillion yen state budget for the new fiscal year. This move facilitates its passage in parliament, marking the first budget change since 1996. The revision aims to keep new bond issuance at a low level, calming bond market concerns.

The Japan Innovation Party has opted to support amendments to the 115 trillion yen ($769.59 billion) state budget for the upcoming fiscal year, aligning with Prime Minister Shigeru Ishiba's coalition.

This decision by the Japan Innovation Party aims to clear the pathway for the budget's passage through the lower house of parliament before the fiscal year begins. It marks a significant development, as it is the first time since 1996 that initial budget allocations face changes, underscoring the weakened political stance of Ishiba's Liberal Democratic Party and its partner Komeito after their recent electoral losses.

Analysts suggest that the extent of the budget revision might be minimal, thus not substantially affecting the planned issuance of 28.6 trillion yen ($190.72 billion) in new bonds, the lowest since 2008. This scenario provides a hopeful outlook for the bond market, which has experienced volatility due to rising yields on Japanese government bonds.

(With inputs from agencies.)