TOKYO (Reuters) - Jun Azumi, a former parliamentary affairs chief for the ruling Democratic Party, will become Japan’s new finance minister, local media reported, after new Prime Minister Yoshihiko Noda’s first choice for the job reportedly turned it down.
Azumi will take charge of Japan’s currency and fiscal policies at a time when the world’s third-biggest economy grapples with the yen’s sharp appreciation and a public debt twice the size of its $5 trillion economy.
— The lineup of the new cabinet is expected to be announced on Friday by Yoshihiko Noda, 54, who was voted in by parliament as prime minister this week, becoming the nation’s sixth leader in five years.
— Noda, himself finance minister from June 2010 in the previous administration, backed a government proposal to double the 5 percent sales tax by the middle of the decade to fund bulging social security costs and curb massive public debt.
— Katsuya Okada, a fiscal hawk who held the party’s No.2 post, turned down Noda’s request to take over the crucial financial portfolio, public broadcaster NHK reported earlier.
AYAKO SERA, MARKET ECONOMIST, SUMITOMO TRUST AND BANKING, TOKYO
“He (Azumi) has not made many comments about intervention or fiscal policies so his basic policy stance is not clear.
The key would be how well he could manage and work with the bureaucrats because of the friction the party has created with bureaucrats. Azumi has appeared on media and leaves an impression as a very intelligent person, so there is a risk that he might pursue his own path without sufficiently consulting others.”
JESPER KOLL, DIRECTOR OF EQUITIES RESEARCH AT JPMORGAN, TOKYO
“Noda’s strong hold is the finance ministry. Assuming he is going to leverage that, no politician wants the job because fiscal, budget and tax policy are going to be led by the prime minister. Whomever Noda nominates, the finance minister will likely be a ‘yes-man’ for Mr Noda.”
— Noda has said Japan will need to raise taxes temporarily to help pay for rebuilding from the devastating March 11 tsunami. But he has grown more cautious about the timing of any rises, saying economic growth and fiscal reform are both vital.
— Noda has promised firm steps including intervention against excessive and rapid currency moves and wants to work closely with the Bank of Japan.
— The new administration will have to cope with a resurgent yen that threatens exports, forge a new energy policy while ending the worst nuclear crisis since Chernobyl.
— The Democrats swept to power two years ago promising to change how Japan is ruled. But the party quickly lost momentum, dogged by internal divisions and a hung parliament as its novice team confronted the global financial crisis. The March disaster left 20,000 dead or missing and has pushed the economy back into recession.
— Moody’s Investors Service cut Japan’s sovereign credit rating on August 24 citing a buildup of public debt and a lack of leadership and a long-term strategy to cope with its fiscal challenges.
Reporting by Tokyo newsroom