Japan’s National Diet passed a record 115.20 trillion yen ($770 billion) budget for fiscal year 2025. The ruling coalition of the Liberal Democratic Party (LDP) and Komeito, along with Nippon Ishin (Japan Innovation Party), supported the bill. This marks the first time that the Japanese government enacted a budget bill after significant revisions by both the Lower and Upper Houses.
The approval of the fiscal 2025 budget was a hard-won victory for Prime Minister Ishiba Shigeru’s government. However, the LDP-Komeito coalition no longer holds a majority in the House of Representatives following the October 2024 Lower House elections. As a result, the ruling party must cooperate with opposition parties to pass legislation, making it more difficult for the government to push bills through.
This budget bill faced a series of challenges, including objections from opposition parties and some members of the LDP. Notably, this is the first time in 29 years that the budget required revisions before being approved. The revised bill was supported by the LDP, Komeito, and Nippon Ishin, but an alternative proposal from the Constitutional Democratic Party of Japan was rejected.
Political funding has been a controversial issue in Japan. The LDP’s involvement in financial scandals contributed to the loss of seats in the Diet. Prime Minister Ishiba’s focus on the economy, under his “Ishibanomics” plan, has been criticized due to the political fundraising scandals surrounding the LDP. In response, the party has promised to end political fundraising parties and revise the Political Funds Control Law.
During discussions about the 2025 budget, the Ishiba government proposed reforms to the high-cost medical expense benefit system. However, this proposal faced resistance from opposition parties and some LDP members. The backlash led to the shelving of the reform, which had been scheduled for implementation in August 2025.
Ishiba also faced criticism due to a “gift voucher” controversy. He distributed 1.5 million yen worth of gift vouchers to LDP members, resulting in a significant drop in his cabinet’s approval ratings. A recent survey by Asahi Shimbun showed the approval rating fell from 40% to 26%, with disapproval rising sharply to 59%.
Despite these controversies, the budget was enacted just one day before the new fiscal year began. However, it remains unclear whether the fiscal policies will ease the financial struggles of ordinary Japanese citizens. Rising rice prices, due to a poor 2023 harvest, inflation, and a weak yen, have caused significant hardship. The government has attempted to mitigate the impact by releasing rice stockpiles, but prices remain high.
The Ishiba administration has promised to address inflation and its impact on consumers. Additionally, measures to protect local jobs from U.S. tariffs on Japanese car imports were also highlighted. As Japan heads toward the Upper House election in July, the Ishiba government faces mounting pressure to address economic concerns, particularly around rice prices and inflation.
In Japan’s political history, rising rice prices have often sparked public unrest. The Ishiba administration must act swiftly to curb rice prices and inflation to avoid a crisis similar to the 1918 rice riots, which led to the resignation of the Terauchi Masatake Cabinet.
