Japan passes key bill, setting stage for election to be called By Alex Zolbert and Yoko Wakatsuki, CNN November 16, 2012 -- Updated 0528 GMT (1328 HKT) Prime Minister Noda struck a deal with the main opposition party this week He agreed to dissolve parliament in exchange for opposition support for key bills They included legislation allowing the government to keep financing itself The dissolution of parliament will be followed by elections, where Noda's party may struggle Tokyo (CNN) -- The Japanese parliament on Friday passed a vital bill that will steer the country away from a fiscal cliff, paving the way for Prime Minister Yoshihiko Noda to call general elections for next month. Under pressure from the main opposition Liberal Democrat Party (LDP), Noda agreed earlier this week to dissolve parliament if the LDP gave its support to key legislation, including the bill passed by the upper house Friday that enables the government to keep financing itself. If Noda follows through on his side of the deal later Friday and dissolves parliament, setting in motion the election process, the move may prove unpopular with some of those within his own party, the governing Democratic Party. And it could cost him his job. Approval ratings for Noda and his cabinet have sagged deeply in the polls, as Japan has failed to haul itself out of the economic morass in which it has stagnated for the past two decades. Many members of his party fear losing their seats in an election. According to the Japanese constitution, elections must be held within 40 days of the dissolution of parliament. Based on current forecasts in Japan, neither of the two main parties would secure enough votes in an election to form a majority government. The LDP is led by Shinzo Abe, a former prime minister who stepped down citing health reasons in 2007 after only a year in office. Despite the bleak election prospects for his party, Noda was left with little choice this week other than to strike a deal with Abe. Failure to get the crucial financial bill through the LDP-controlled upper house would have left the government in danger of running out of cash. The potential stalemate between the two main parties at the expected election raises the prospect of a period of deal-making with smaller parties in the legislature to form a coalition. The big question is whether the resulting government will have the unity and vision to enact measures to get the country out of its economic woes. Data released this week showed the Japanese economy contracted at an annual rate of 3.5% in the latest quarter, suggesting it risks slipping back into recession. A bitter territorial dispute with China has infected trade relations between the two Asian economic giants. Chinese consumers have been shunning Japanese goods because of the spat, sharply dragging down sales in the country for car makers like Toyota and Nissan. More broadly, the country is wrestling with a huge debt burden and an increasingly aging population, challenges that analysts say will require bold reforms to tackle.