JAKARTA - Japanese public concerns are increasing about the size of gasoline subsidies that the government has re-imposed to hold back price increases amid the Middle East conflict.
Japanese Finance Minister Satsuki Katayama said on Tuesday (7/4) that the government did not have an estimate of the amount of the subsidy.
"At this stage, we have not made an estimate of how much (subsidies) are needed per month, because the volatility of the West Texas Intermediate crude oil futures contract is very high," Katayama told reporters as reported by ANTARA from Kyodo, Tuesday, April 7.
Concerns over deteriorating fiscal conditions have increased in financial markets after the Japanese government on March 19 decided to continue subsidies. Gasoline prices have risen along with the surge in oil prices since the US-Israel attacked Iran on February 28.
The Japanese government initially used about 280 billion yen from a certain fund to keep gasoline prices at around 170 yen ($1.45) per liter. However, as the funds are expected to run out by the end of April, there is an additional 800 billion yen ($6.7 million) from the 2025 fiscal reserve.
Analysts assess that the subsidy fund could run out in two to three months if the oil price remains high, so additional spending plans are needed.
The Japanese government has not ruled out using up to 1 trillion yen from reserves in the 2026 fiscal budget, even though the funds are allocated for emergency responses, such as major natural disasters.
Gasoline subsidies reached 49.8 yen ($0.45) per liter for the week to Wednesday (8/4), the highest since the program was launched in January 2022, according to Japan's Ministry of Economy, Trade and Industry.
The ministry adjusts the subsidy every week based on the next week's retail price projection, which reflects changes in crude oil prices.
Thanks to subsidies, the average retail price of gasoline fell to around 170 yen per liter after reaching a record 190.80 yen per liter on March 16.
The Kyodo News survey at the weekend showed that 69.6 percent of respondents wanted the government to continue to provide subsidies to keep gasoline prices down.
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