Exclusive-Japan's extra budget to include funding from fresh debt, source says

TOKYO - Japan's government will likely issue fresh debt as part of funding for a planned extra budget to cushion the economic blow from the Middle East war, a government source with direct knowledge of the deliberation told Reuters on Monday.

Any additional debt issuance would further strain Japan's already worsening finances and may accelerate rises in long-term interest rates.

The yield on the benchmark 10-year Japanese government bond (JGB) rose 10 basis points to 2.8% on Monday, marking the highest level since October 1996.

Japan's government is looking at compiling a supplementary budget to ease household energy costs, as fuel prices rise due to the oil shock triggered by the Iran war, sources told Reuters last week.

(Reporting by Tamiyuki Kihara, Writing by Leika KiharaEditing by Shri Navaratnam)

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This story was originally published May 17, 2026 at 8:02 PM.