Japan Fuel Subsidies May Go Beyond April $41bn Spent To Date

(CTN News) – The Japanese government and ruling party are considering extending fuel subsidies beyond April, sources told Reuters on Friday, due to a weak economy and political pressure to spend more money.

Data showed on Thursday that the country unexpectedly fell into recession at the end of last year and lost its title as the third-largest economy in the world to Germany, underscoring the weakness of domestic consumption in a period of steady inflation.

Several times as part of its fiscal packages, the government has subsided energy wholesalers to curb domestic gasoline, kerosene, and other fuel prices.

There is a political backlash against Prime Minister Fumio Kishida’s administration over a funding scandal, and lawmakers from the ruling Liberal Democratic Party (LDP) and its coalition partner Komeito are urging the subsidies to be extended further, according to a number of party and government sources familiar with the matter.

As part of the extension of the program, Kishida announced another measure to support electricity and gas bills by the end of April, along with the extension of the programme.

As a result of these subsidies, consumer inflation is expected to decline by about 1.0 percentage point in the four months following January, according to a government estimate.

According to the Japanese Board of Audit, over 6.2 trillion yen ($41 billion) have been spent on the fuel subsidy program so far.

LDP members express concern that subsidizing fossil fuels is not aligned with the government’s climate transition goals and would like to know when the program will end, according to party sources.

It is possible to extend the subsidies at least until the end of summer, according to a government source, who noted that autumn would be the ideal time to end the program due to the decrease in energy demand.

It has not been decided whether the subsidies will be withdrawn, Finance Minister Shunichi Suzuki told a Friday parliamentary session, adding the government would make a decision regarding the policy after April, taking into account the current energy Fuel prices.

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