Tokyo: Japanese Prime Minister Shigeru Ishiba issued a public apology on Friday for distributing gift certificates to ruling party lawmakers, a move that threatens to further erode his administration’s already declining approval ratings and could delay the passage of next fiscal year’s budget.
The controversy adds to the political uncertainty surrounding Ishiba’s leadership ahead of the upper house elections scheduled for July. This comes at a critical time for Japan’s economy, which is grappling with pressures from the escalating trade war initiated by U.S. President Donald Trump.
“Market volatility is heightening due to uncertainty over U.S. and European economic policies. But now, market players may need to look more carefully at domestic political developments,” said Yusuke Matsumoto, senior market economist at Mizuho Securities.
Gift-Giving Scandal Sparks Criticism
Speaking in parliament, Ishiba explained that he used “pocket money” to distribute gift certificates to 15 lawmakers of the ruling Liberal Democratic Party (LDP) on March 3 as a “show of appreciation” for their efforts in securing election victories. Domestic media reports indicated that each gift certificate was worth 100,000 yen ($673).
When questioned by reporters on Thursday about whether he would consider stepping down, Ishiba responded that the gifts did not violate any laws, according to the Nikkei newspaper.
“My action caused distrust and anger among many people, for which I deeply apologize,” Ishiba told parliament on Friday in response to inquiries from a ruling party lawmaker.
Although Ishiba maintained that the gesture was purely personal and devoid of political motives, the move has drawn criticism even from within the LDP’s coalition partner. Several opposition parties have also called for his resignation.
Budget Passage at Risk
The gift scandal adds further complications for Ishiba’s minority coalition, which has already faced challenges in passing the government’s budget plan for the fiscal year beginning in April. To secure approval, rare amendments had to be made to appease opposition parties and meet the March 31 deadline.
Analysts warn that failure to pass the annual budget on time could force the government to implement a temporary stop-gap budget, potentially damaging Ishiba’s political standing and slowing economic progress by delaying crucial spending plans.
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Tetsushi Sakamoto, chairperson of the LDP’s Diet Affairs Committee, told Kyodo News on Friday that the gift issue could further hinder efforts to pass the budget by the end of March.
Political Ramifications Ahead of Elections
Japan is set to hold an upper house election in July, and Ishiba’s handling of this latest controversy could impact the ruling coalition’s slim majority. His administration has already been weakened by previous political scandals, including unrecorded donations to lawmakers, which have eroded public trust.
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A recent poll conducted by public broadcaster NHK showed that Ishiba’s approval rating has declined to 36%, down from 44% in February.
Economic Outlook
Japan’s economy expanded at an annualized rate of 2.8% in the final quarter of last year, driven by strong business investment and consumer spending. However, Reuters analysts project that growth will slow significantly to just 0.4% due to rising living costs and weakening global demand, which are expected to weigh on both domestic consumption and exports.
