The Cabinet approved Dec. 24 an ¥83 trillion state budget for fiscal 2008 to boost regional economies and spur economic growth, but growing spending and a larger budget deficit will put fiscal reform in jeopardy.

The administration of Prime Minister Yasuo Fukuda faces a tough road ahead in regaining fiscal discipline and securing revenues to cover rising social security costs, and will probably raise the consumption tax from 5 percent within a few years. This is likely to be challenging at a time when opposition parties hold a majority in the House of Councilors and Cabinet approval ratings have been on the decline.

The general account budget for the year beginning April 1, the first compiled under the Fukuda Cabinet that was inaugurated in September, is 0.2 percent larger than the initial budget for fiscal 2007 and is the second consecutive yearly expansion.