Japan PM Orders Review of Fuel Subsidies Amid Middle East Uncertainty

Thank you all for your hard work. I will now explain the emergency measures to curb sharp fluctuations, in light of the situation in the Middle East, as follows.

Regarding subsidies for fuel oil such as gasoline, diesel, heavy oil, and kerosene, they are intended for fuel oil subsidies, and are strictly measures to curb sharp fluctuations.

In addition, members of the ruling parties, as well as the Democratic Party for the People, the Shudo, and opposition parties such as the Constitutional Democratic Party, have also raised concerns about the fiscal burden and suggested a gradual review and that we should consider an exit strategy.

I have received these recommendations. Therefore, while closely monitoring the impact of the situation in the Middle East on future prices and the economy, we will consider how future support should be provided, taking into account proposals from each party,

and I will instruct the minister to do so.

Today, I will instruct the Minister of Economy, Trade and Industry.

That is the instruction I will give. At the same time, to secure the funds needed for fuel support for the time being, we will ensure the required fund size.

I will instruct the Minister of Economy, Trade and Industry to take steps to secure funding and make the necessary adjustments.

That is my instruction. - That is all from me.

Could you call on me? - Go ahead. I'm Okuhara from the Tokyo Shimbun.

Thank you. I'd like to ask about the review.

Some reports have said that the subsidies will already be scaled back starting in November, with prices rising by about five yen on average each month.

That is one forecast being reported. Will the review you are instructing the minister to conduct be based on that proposed plan, or will it start from a blank slate?

Which will it be? - I will instruct the Minister of Economy, Trade and Industry to consider it starting today, so I won't prejudge the outcome.

However, we will consider how support should be provided flexibly, including the duration of support and how the measures will be phased out.

The details have not yet been decided, - yet.

I have one more question. The other day, at the milestone marking ten years of reconstruction in eastern Japan, you also said that the subsidies were contributing to the rate of price increases, or rather, that you thought - they were.

- Sorry, could you say that again?

You have also said before that the gasoline subsidies —sorry, the fuel subsidies were, you know, helping to curb the rate of price increases.

When you consider that it contributes to...

I believe you also spoke about having said something along those lines.

You said there had been criticism from both the ruling and opposition parties, that there had been such comments, but even so, why now are you issuing this instruction?

If you could share how you feel— Yes. Well, as for me, to curb the rate of price increases, I believe this fuel subsidy has made a very significant contribution.

Especially now, as well, compared with prices in Europe and South Korea, Japan's prices are overwhelmingly lower than theirs.

Some countries, for example, charge 400 yen per liter, while Japan is at around 124 yen.

This also applies to diesel, heavy oil, and kerosene, so in that sense, you may not really feel its impact, but it has helped curb prices through transportation costs, as well as costs that support industry, and in various other ways,

helping keep down prices that affect people's lives and livelihoods.

I believe it has been helpful. However, during Diet debates to date, members of various parties have said we should consider an exit strategy.

They have also asked whether we should review it gradually, and raised that point, so I decided to instruct them to examine it at this point.

Did you assume the effect of the consumption tax cut starting next April could offset it, or something like that?

Was that not the case? As for uninterrupted measures against rising prices, for people who are employed, this December, especially with an income of zero, each person will receive 30,000 to 60,000 yen, which will be returned through a tax rate adjustment.

There are also measures like that, and from next April the consumption tax cut is still under consideration as a bill, but if it is passed, those measures will also get underway.

However, regarding this fuel subsidy, regardless of whether they are in the ruling or opposition parties, all parties have raised this issue, so at this point, we need to review it once.

And this is also under extremely uncertain circumstances in the Middle East, so, it is difficult to forecast things like crude oil prices and the amount of funding that will be needed, but taking future crude oil prices and the fund's balance into account as well,

I would like you to consider it. — That's what I think.

There are diplomatic issues, — Okay, one last question.

I'm Fujiwara from Nippon TV. The opposition has raised this point before, I believe.

Why at this point did you decide to issue — this instruction?

For the time being, as I said at the outset, this is about securing the necessary funds, and I will discuss it with the minister, so I will issue this instruction.

I will issue the instruction, but nothing will suddenly change starting next month.

That said, at this point, we have also received calls asking what the exit strategy for these measures will be, so we will ask them to consider it.

— That's the plan. All right, that's all. One more— — one more comment.

Could you just tell us when you'll reach a conclusion?

Please tell us when you'll reach — a conclusion.

Well, that depends on how the review goes, and we first need to secure the necessary funds for the current subsidies, including the required fund size, so we have to consider both aspects as we proceed.

That's what we need to do. I can't give you a specific date, such as a particular day this month, but we will ask them to consider it as soon as possible.

— That's what it comes down to. — Thank you very much.

Thank you for your time.