Fiscal Insight: An estimate of FY2027 JGB issuance plan

Research evidence excerpt

Fiscal Insight: An estimate of FY2027 JGB issuance plan

Nomura | Fiscal Insight 6 July 2026

Based on the FY2025 general account settlement announced by the Ministry of Finance

on 3 July, we made a current estimate of the FY2027 JGB issuance plan, while making

certain assumptions regarding the Takaichi administration’s key policies, including the

consumption tax cut, growth strategy, defense spending increase and the budgeting of

permanent measures in the initial budget. We discuss, in order, the FY2026 second

supplementary budget, the FY2027 general account budget and the FY2026 revised /

FY2027 initial JGB issuance plan.

FY2026 second supplementary budget

At the 25 June meeting of the Council on Economic and Fiscal Policy, Minister of Finance

Katayama indicated that, even if a supplementary budget became necessary in autumn or

later, it would be limited to measures of truly high urgency and that, in principle, no JGB

would be issued to finance it. On the other hand, for example, multi-year national

resilience measures are being included in supplementary budgets every year, so at least

for FY2026, the possibility of a second supplementary budget cannot be ruled out.

Accordingly, here we assume that a second supplementary budget will be compiled that

includes JPY4trn of various policy measures, roughly equivalent to the average level of

supplementary budgets before they expanded during the COVID-19 pandemic period (the

FY2004-FY2019 average, excluding FY2009, the year after the global financial crisis, and

FY2011, which was affected by the Great East Japan Earthquake; Fig.1). If we make the

assumptions below regarding upside revision in tax revenue and cuts to pre-existing

expenditures, the secured funding would exceed the increase in expenditures, and newly