Is it a big problem if the budget fails to clear parliament by the end of March?

With only days left before the end of the fiscal year, parliament has yet to pass the budget for fiscal 2025 — a rare situation in Japan, where getting it passed before April is seen as the government’s most pressing mission.

Over the last few days, negotiations between the ruling and opposition parties intensified, with the Liberal Democratic Party-Komeito coalition pushing for a vote in the Upper House by Monday, the last day of the 2024 fiscal year.

The opposition, meanwhile, is walking a fine line between trying to appear as responsible parties — or just not being seen as the villains that block the budget — and playing just enough hardball with the government to raise their profile ahead of the Upper House election in the summer.

But what would happen if the budget failed to clear parliament by the end of March?

In such a case, the government would need to draft an interim budget to cover the period until the actual budget is enacted, a development that would further dent the already-deteriorating reputation of Prime Minister Shigeru Ishiba's administration.

According to the Constitution, the budget for a new fiscal year automatically takes effect 30 days after its approval in the Lower House, even without a vote in the Upper House.

Following negotiations between the ruling coalition and opposition parties, an amended version of the government’s budget was approved in the Lower House on March 4, which means it automatically takes effect on Wednesday.

The ruling bloc is focused on clearing the budget on Monday to avoid drafting an interim budget. Twice in the past — in 1982 and 1985 — the government went into a new fiscal year without either getting the budget approved or an interim budget.

However, a small delay to the budget clearing parliament isn’t likely to significantly hinder the functions of the government, even in the absence of an interim budget — unlike a government shutdown in the U.S. But it would deal another blow to Ishiba’s already wobbly political footing.

In a meeting between the LDP and opposition Constitutional Democratic Party of Japan's (CDP) Upper House executives, the two parties agreed to vote on the budget in the upper chamber of parliament on Monday.

“We’ve had a meaningful discussion in the Upper House so far,” CDP Upper House Diet affairs chief Yoshitaka Saito told reporters after the meeting. “But as Prime Minister Ishiba himself admitted, I don’t think we’re done with the discussions yet.”

Unlike in other years, the budget needs to be voted on in the Lower House for a second time this year following Ishiba’s reversal on medical co-payments and a subsequent revision. The schedule for a final vote in the Lower House has yet to be determined, but media reports have suggested that it might take place on Monday.

Constitutional Democratic Party of Japan leader Yoshihiko Noda has boasted about the results achieved by his party in the ongoing parliamentary session, but he has also admitted that a united opposition front could have secured even more policy concessions from the ruling coalition. | JIJI

Confusing remarks by Ishiba over an alleged economic stimulus package earlier this week added to his existing woes, including a public backlash over his distribution of gift vouchers to newly elected lawmakers.

Well aware of the ruling camp’s uneasiness, the CDP tried to capitalize on Ishiba’s political missteps and took a harder line in parliamentary deliberations — all while projecting a public image as the responsible party that pushed the government to a reversal on the budget.

The CDP is also pushing for four former senior members of a now-defunct LDP faction that was once led by former Prime Minister Shinzo Abe who were implicated in a slush funds scandal to be summoned to give testimony to parliament a second time, after having done so last year.

CDP leader Yoshihiko Noda has boasted about the results achieved by his party in the ongoing parliamentary session, but he has also admitted that a united opposition front could have secured even more policy concessions from the ruling coalition.

“Each party works strenuously to achieve its own goals, with the goal of appealing to the public ahead of the Upper House election,” Noda said in a news conference Friday.

“If the opposition parties had shown stronger unity, we could have achieved budget revisions of a larger scale. So, in that sense, I think we should reaffirm that cooperation among the opposition parties should be a fundamental principle going forward.”