Japanese Prime Minister Shigeru Ishiba issued a public apology on Friday after admitting to distributing gift certificates to ruling party lawmakers, a move that has sparked ethical concerns and threatens to further erode his already declining approval ratings. The controversy also risks delaying the passage of next year’s budget, adding to Japan’s growing political and economic uncertainty.

Speaking in parliament, Ishiba acknowledged that he had used his personal funds to give gift certificates to 15 Liberal Democratic Party (LDP) lawmakers before a dinner on March 3. He framed the gesture as a “show of appreciation” for their efforts in getting elected. However, reports from domestic media revealed that each lawmaker received gift certificates worth 100,000 yen ($673), raising concerns over political ethics and fairness.

“My actions have caused distrust and anger among many people, for which I deeply apologize,” Ishiba said in response to questions from ruling party lawmakers. While he insisted the gifts were personal and did not break any laws, criticism has mounted from both opposition leaders and members of the LDP’s coalition partner, with some calling for his resignation.

The scandal has emerged at a particularly precarious time, as Japan’s economy faces challenges from a growing trade war initiated by U.S. President Donald Trump. Market analysts caution that political instability in Japan could further unsettle investors.

“Market volatility is already heightened due to uncertainty over U.S. and European economic policies, but now investors must also closely monitor domestic political developments,” said Yusuke Matsumoto, a senior market economist at Mizuho Securities.

The controversy is also complicating efforts to pass the government’s budget for the fiscal year beginning in April. The LDP has already made rare amendments to the budget to appease opposition parties, and failure to secure approval by the March 31 deadline could force the government to implement a temporary stop-gap budget. Such a delay could further weaken Ishiba’s political standing and disrupt economic planning.

Tetsushi Sakamoto, chairperson of the LDP’s Diet affairs committee, acknowledged that the scandal could hinder prospects for passing the budget on time.

With an upper house election set for July, the timing of the controversy is especially delicate. Ishiba’s coalition holds only a slim majority, and his administration has already been weakened by previous scandals involving unrecorded donations to lawmakers. A recent NHK poll showed his approval rating had fallen to 36%, down from 44% in February, signaling growing public dissatisfaction with his leadership.