Japan: Draft Basic Policy for 2026

Research evidence excerpt

Japan: Draft Basic Policy for 2026

Global Markets Research

Japan: Draft Basic Policy for 2026 1 July 2026

Economics - Japan

Research AnalystsFocus on whether a “responsible” stance can be

Japan Economicsachieved despite a shift toward expansion

Kengo Tanahashi - NSC

Section on consumption tax cut included in the draft outline is now kengo.tanahashi@nomura.com

marked as undecided +81 3 6703 1295

Masaki Kuwahara - NSC

• The government has published the draft of its Basic Policy on Economic and Fiscal masaki.kuwahara@nomura.com

Management and Reform (Basic Policy). As previously indicated, the draft calls for +81 3 6703 3876

major policy shifts, including establishment of a framework for investments in “a strong

Kyohei Morita - NSC and prosperous Japan” in the FY27 initial budget. The key question is whether the kyohei.morita@nomura.com

government can still manage to steadily reduce the ratio of outstanding government +81 3 6703 1395

debt to GDP.

• The subject of the consumption tax cut has yet to be decided. Discussions at the

National Council have stalled, but this is a critical moment for finalizing the framework

given that the cabinet decision on the Basic Policy is expected in mid-July.

• A passage was added calling for the BOJ to closely coordinate with the government in

accordance with Article 4 of the BOJ Law and the 2013 government-BOJ joint

statement. This makes it even more important to monitor the distance between the

government and the BOJ over future rate hikes.

Draft Basic Policy: References to "strong and prosperous Japan" investment

framework

On 30 June, the government published the draft of its Basic Policy on Economic and

Fiscal Management and Reform (Basic Policy). The Basic Policy sets out the