Japan’s lower house of parliament has approved a supplementary budget of $118 billion to fund Prime Minister Sanae Takaichi’s stimulus package, which includes measures to combat inflation and boost the country’s military. The 18.3-trillion-yen budget was passed with the support of three independent lawmakers who agreed to work with the ruling Liberal Democratic Party (LDP), giving Takaichi the legislative majority she needed.

The budget will now be sent to the upper house, where Takaichi’s coalition still lacks a majority. However, two opposition parties, the Democratic Party For the People and the LDP’s former partner Komeito, have pledged to support the budget, making it likely to pass next week. The stimulus package includes energy subsidies, cash handouts, and investment incentives in key fields such as semiconductors and artificial intelligence.

The budget also allocates funds for expanded defense spending, as China increases its military activities in the region. Takaichi has stated that her government will implement “strategic fiscal spending to protect people’s livelihoods and build a strong economy.” More than 60% of the planned spending will be financed through new government bonds, which has raised concerns about Japan’s fiscal health.

Japan already has the highest debt-to-GDP ratio among major economies, projected to reach 232.7% this year, according to the International Monetary Fund. Takaichi’s promotion of large-scale government spending has led to a rise in long-term interest rates, with investors dumping Japanese government bonds. Despite this, Takaichi remains popular among voters, with her cabinet approval rating standing above 60% in various media polls.

The passage of the budget is a significant development for Takaichi’s government, which lost its legislative majority last year. The LDP’s coalition with the Japan Innovation Party now commands 233 seats in the 465-seat lower house. The budget’s approval is expected to have a significant impact on Japan’s economy, with the stimulus package aimed at boosting growth and mitigating the effects of inflation. With the upper house set to vote on the budget next week, attention will be focused on the outcome and its implications for Japan’s economic future.