By Shunsuke Tanaka
Yomiuri Shimbun Staff Writer
Japanese Prime Minister Sanae Takaichi stressed her intention to make commitments on financial sustainability, after announcing Monday that she will dissolve the House of Representatives, the lower chamber of the Diet, on Friday. A snap election is set to be held on Feb. 8.
"We will continue to keep the growth rate of (Japan's) outstanding debt to within the range of the economic growth rate and thereby reduce the debt-to-GDP ratio," Takaichi said at Monday's press conference, expressing her intention to work on fiscal reconstruction.
The yen has been on an extended depreciating trend against the dollar, and Japan's long-term interest rates have been rising due to concerns over worsening public finances. Financial sustainability may become a major point of contention during campaigning for the lower house election.
Under the slogan of "responsible and proactive public finances," Takaichi compiled the largest supplementary budget since the COVID-19 pandemic for fiscal 2025, which ends March 2026. The Cabinet last month approved the draft initial budget for fiscal 2026, which is the largest in Japan's history. Concerns about fiscal deterioration are rising in the market, as the Takaichi administration has also dropped its fiscal consolidation goal of achieving a single-year primary balance surplus for national and local governments.
After the launch of the Takaichi administration, the yen temporarily weakened past 159 yen per dollar. Experts point out that the weakening of the yen will lead to price increases in imported goods, which will hamper the effectiveness of the government's measures against rising prices.
Finance Minister Satsuki Katayama on Friday tried to keep the market in check by hinting at the possibility of a currency intervention. "I have said repeatedly that I will take resolute measures through all possible means," she said.
During Monday's press conference, Takaichi stressed her achievement of keeping the issuance of new government bonds below 30 trillion yen in the 2026 draft initial budget. "We would like to secure the trust of the market by stating clear and objective targets," she said. She also emphasized her efforts to accelerate a growth strategy for achieving a robust economy. "The entire world will suffer if they cannot obtain Japan's technology and products," she said.
Takaichi spoke on the need for investments related to crisis management, which directly links to bolstering national security. "For a long time, we have failed to make sufficient investments in such fields," she said. "We have a responsibility to break free from the shackles of excessive fiscal austerity and begin immediately."
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This article is from The Yomiuri Shimbun. Neither Dow Jones Newswires, MarketWatch, Barron's nor The Wall Street Journal were involved in the creation of this content.
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January 20, 2026 19:12 ET (00:12 GMT)
Copyright (c) 2026 The Yomiuri Shimbun
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