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By Makiko Yamazaki
TOKYO (Reuters) - Japan's parliament passed the budget for fiscal 2025 on Monday, the day before the new financial year starts, after Prime Minister Shigeru Ishiba's minority coalition was forced to revise the $770 billion budget bill twice.
The rare last-minute passage of the budget by parliament highlighted the diminished strength of Ishiba's coalition camp, and could foreshadow more political wrangling ahead of an upper house election in July.
The initial budget allocation was amended twice, once each in the lower and upper houses for the first time in Japan's post-war history, to incorporate some demands by opposition parties for spending measures.
These measures included higher household subsidies for free school education, as well as a halt in raising the cap for high medical expenses that patients have to shoulder.
The plan to raise the cap sparked opposition from some lawmakers of Ishiba's own Liberal Democratic Party, reflecting Ishiba's unstable political standing within the party.
The size of the budget was largely unchanged at 115 trillion yen ($771.40 billion), however, as higher spending would be filled by a reserve fund earmarked for emergencies and other funds.
Despite the passage of the budget, Ishiba's LDP and coalition partner Komeito will struggle to win public support as it faces repercussions from a scandal over the party's unreported political funds, economists said.
The approval rating for Ishiba's cabinet plunged to 27.6%, the lowest since he took office in October, according to a Kyodo News survey this month.
A potential major defeat for the coalition camp in the July upper house election could force it to court opposition parties as coalition partners or at least make alliances for policy moves.
Partnership with the Democratic Party for the People (DPP) or Japan Innovation Party (JIP) would likely result in expansionary fiscal and monetary policies, Takahide Kiuchi, executive economist at Nomura Research Institute (NRI), said in a report on Monday.
Ishiba has already hinted that he would "introduce strong measures to counter rising prices", in an apparent effort to appease voters ahead of the election.
($1 = 149.0800 yen)
(Reporting by Makiko Yamazaki)
