The review is aimed as much at bond investors as at the budget, since concern over how Takaichi’s pledges will be funded has pushed 10-year JGB yields to multi-decade highs. Credible savings that cap new debt issuance near 40 trillion yen could ease some fiscal risk premium in long-dated JGBs and lend modest support to the yen. However, the first round’s thin results leave markets likely to wait for concrete numbers from year-end budget talks before giving the government credit. A record 143 trillion yen in budget requests underlines how wide the funding gap could be.--- Japan’s first efficiency drive found three tax breaks to scrap out of 120, so Takaichi is now checking the government’s back pockets for idle cash before the bond market loses patience.Summary:Japan’s government said on Friday it would relaunch its DOGE spending review, modelled on the US Department of Government Efficiency, Reuters reportedThe first round reviewed about 120 tax breaks and produced just three abolition proposalsThe new review targets 201 special-purpose government funds expected to hold around 7 trillion yen, about $44 billionThe money would help fund a cut to the consumption tax on food from April 2027, along with defence and industrial policy demandsTakaichi has pledged to cap new debt issuance near 40 trillion yen, against record budget requests of 143 trillion yenConcerns about public finances have pushed 10-year JGB yields to multi-decade highsJapan’s government said on Friday it would relaunch its spending review, extending scrutiny to tens of billions of dollars in public funds and subsidies as it searches for ways to pay for Prime Minister Sanae Takaichi’s costly policy pledges, Reuters reported.The review is part of Japan’s DOGE initiative, named after and modelled on the US Department of Government Efficiency. Its first round, which examined special tax measures earlier this year, produced little: ministries reviewed roughly 120 tax breaks and proposed abolishing just three. That disappointing result has added pressure on the government to take a tougher line, as it looks for funding for a planned cut to the consumption tax on food from April 2027 while facing rising demands for defence and industrial policy spending.This time the focus is on Japan’s 201 special-purpose government funds, which together are expected to hold around 7 trillion yen, or about $44 billion, by the end of next fiscal year. The plan calls for idle or long-unused money to be returned to the national treasury, and for tougher cost-benefit checks on subsidy programmes, using outside experts and evidence-based policymaking. A government source told Reuters that Takaichi has high hopes for the review as a meaningful source of new revenue given the size of the funds.The initiative comes as the benchmark 10-year Japanese government bond yield trades at multi-decade highs, driven by concern that Takaichi’s spending plans could require more debt issuance and further strain public finances. Takaichi, keen to move away from her image as a reflationist who favours heavy fiscal stimulus, has pledged to keep new debt issuance at around 40 trillion yen, even as budget requests for next year have reached a record 143 trillion yen.Not everyone is convinced the approach is the right one. An economist at a Japanese research institute warned that redirecting money from funds and subsidies to pay for a consumption tax cut risks shifting resources away from supply-side investment toward demand stimulus, and argued that channelling fiscal resources into investment would do more for growth while adding less to inflation.The review’s findings are expected to inform year-end tax reform talks and budget negotiations, where the government will be under pressure to show how it intends to fund its promises while keeping the confidence of bond investors. This article was written by Eamonn Sheridan at investinglive.com.