2026 Kumamoto Earthquake

Research evidence excerpt

2026 Kumamoto Earthquake

Global Markets Research

29 July 2026Fiscal Insight

Rates - Japan

Research Analysts

2026 Kumamoto Earthquake Fiscal Policy

Masaki Kuwahara - NSC

First use contingency fund, then supplementary budgets, if needed. masaki.kuwahara@nomura.com

+81 3 6703 3876

We extend our heartfelt sympathies to all those affected.

On 28 July, an earthquake with a maximum seismic intensity of 7 struck Kumamoto

Prefecture. Tremors have continued frequently since then.

First use contingency fund, then supplementary budgets if needed

As for fiscal measures going forward, the first line of response is likely to be the use of

contingency fund. For example, in response to the 2024 Noto Peninsula Earthquake,

which occurred on 1 January 2024, the cabinet decided to use JPY4.7bn in contingency

funds on 9 January, and additional reserve fund spending was later approved in January

and March, bringing total use from the FY2023 contingency fund to JPY0.3trn (Fig.1).

If necessary, response through a supplementary budget may then be considered. No

supplementary budget was compiled immediately after the 2024 Noto Peninsula

Earthquake, but on 16 January 2024, changes to the FY2024 initial budget were approved

by the Cabinet, increasing the contingency fund from JPY0.5trn to JPY1trn. From April

2024 through February 2025, contingency fund spending was approved in stages, and the

total amount used from the FY2024 contingency fund ultimately reached JPY0.5trn,

roughly equal to the amount added (Fig.1). After the Hokkaido Eastern Iburi Earthquake

on 6 September 2018, the Kumamoto Earthquake on 14 April 2016, and the Great East

Japan Earthquake on 11 March 2011, supplementary budgets were compiled about one

month to 40 days after the disaster, following the use of contingency funds.