The Diet passed a 79.69 trillion yen budget for fiscal 2006 on Monday with the backing of Prime Minister Junichiro Koizumi's ruling coalition.
With the approval of the budget for the year starting April 1, lawmakers are expected to shift their focus to the upcoming race for the next prime minister and a government blueprint to restore Japan's debt-ridden finances as well as bills for medium-term reforms to curb administrative and public medical expenses.
"Now that the budget's passage during the (current) fiscal year is realized, I will work for its smooth implementation from April to consolidate the economic recovery," Koizumi later told a news conference, adding he hopes to end deflation as soon as possible.