Japan Cabinet Approves Record $732 Billion Budget

Japan's Cabinet approved a record budget of ¥115.5 trillion ($732 billion) for the fiscal year starting in April 2025, reflecting a 2.6% increase from the previous year. This budget is primarily supported by a projected ¥78.4 trillion in tax revenue, allowing for a 19% reduction in new bond issuance. However, Prime Minister Shigeru Ishiba's minority government faces significant challenges in passing the budget through parliament, as it must negotiate with opposition parties, particularly the Democratic Party for the People (DPP), which is pushing for further income tax reforms. Ishiba's government has lost its lower house majority, complicating these negotiations and raising concerns about its political stability ahead of upcoming elections. The DPP's demands could jeopardize tax revenue, while other opposition parties have alternative proposals that could sway support. The Prime Minister's approval ratings have also declined, adding pressure to secure the budget's passage by March 2025.