With the Diet expected to approve the fiscal 1996 supplementary budget Jan. 31, the focus of legislative debate will shift to the fiscal 1997 budget, the No. 1 item on the agenda for the current session.The minority government of Prime Minister Ryutaro Hashimoto and his Liberal Democratic Party hope to have the state-drafted 77.4 trillion yen budget approved by the Diet within this fiscal year, which ends March 31, without revisions. Because the budget package was compiled late last month after repeated discussions between the LDP and its two smaller allies — the Social Democratic Party and New Party Sakigake — “It would be natural for the two parties to support the budget package,” LDP policy chief Taku Yamasaki said.The LDP, which lacks a majority in both chambers of the legislature, must have cooperation from its two allies to pass the budget bills. The SDP has yet to decide whether it will vote for the package, while Sakigake has basically agreed to approve it. However, it is possible that the SDP and Sakigake will opt to reject the budget if certain bills to be submitted to the Diet in March are not in line with earlier agreements reached by the three parties.For instance, the three parties agreed in December to set up a new state agency to inspect and supervise financial institutions that would be independent from the powerful Finance Ministry. Bills to create the watchdog body and reform the ministry are expected to be drawn up by mid-March. The SDP and Sakigake insisted strongly that the new agency be made sufficiently independent to take full charge of financial administration, thus stripping the ministry of that authority.However, some political observers have doubts about whether the agency will have full independence because the bills are now being prepared by a team of career bureaucrats, most of them from none other than the Finance Ministry. If the bills go against the initial agreement, the SDP and Sakigake may demand revisions by the LDP-led government, thus putting the budget on hold.