The 77.67 trillion yen fiscal 1998 state budget cleared the Lower House late March 20 and moved on to the Upper House with no amendments, allowing Prime Minister Ryutaro Hashimoto to clear a major political hurdle.

The Lower House Budget Committee approved the budget at 7:35 p.m. A plenary session late March 20 passed it with the comfortable majority of the Liberal Democratic Party plus its two non-Cabinet allies -- the Social Democratic Party and New Party Sakigake.

The LDP, fearing negative impact on already weakened public economic sentiment, still says it hopes to have the annual budget passed by March 31, the end of the current fiscal year. But most observers say a stopgap budget for the first few weeks of April is unavoidable.

By law, the budget automatically takes effect 30 days after being approved by the Lower House, even without a vote by the Upper House. Therefore, the fiscal 1998 budget will take effect no later than midnight April 18. In its bid to have the budget approved by the Upper House as early as possible, the LDP plans to seek cooperation from part of the opposition camp.

In view of the sluggish economy, which in fiscal 1997 is widely expected to post negative growth for the first time in 23 years, the LDP is already seeking to implement pump-priming steps in the form of a supplementary budget as soon as the initial fiscal 1998 budget is enacted.

This extra budget -- part of a comprehensive economic stimulus package currently being mulled by the government and the ruling party -- is expected to include measures such as additional public works spending to help boost domestic demand. But compilation of a large-scale extra budget could hurt Hashimoto, especially if its contents infringe upon the Fiscal Structural Reform Law, which calls for the fiscal deficit to be cut to no more than 3 percent of gross domestic product and no more deficit-covering bond issues from fiscal 2003 onward.

The fiscal 1998 budget is a scant 0.4 percent larger than the initial budget for the current fiscal year, due to the government's efforts to reduce the nation's snowballing fiscal deficit, now at critically high levels.