Tags: Japan | Names | Fiery Battler | New Finance Minister

Japan Names Fiery Battler as New Finance Minister

Wednesday, 06 Jan 2010 01:48 PM

Japan's new finance minister, Naoto Kan, is a fiery ruling party heavyweight who faces the tough task of trying to stimulate the economy without upsetting investors by bloating an already huge public debt.

Kan, 63, replaces elderly Hirohisa Fujii, a budget expert and fiscal hawk who stepped down as finance minister for health reasons after weeks of wrangling over next year's budget.

A former health minister and central bank critic who lacks expertise on budget and tax issues, Kan may set a less predictable path than Fujii, worrying bond investors who want to see Japan keep spending in check so it slows the public debt's swift rise towards 200 percent of GDP.

In his old job of national strategy minister, Kan helped oversee the budget and set fiscal priorities but he is not seen as much a fiscal hawk as his predecessor, and may not be so determined to fight calls for higher spending to boost the economy.

"There are concerns that he may get swept away by the views of other people," said Tetsuro Sawano, senior fixed income strategist at Mitsubishi UFJ Securities.

A history of battling bureaucrats could also fan concern over whether Kan can work closely with officials at the Bank of Japan and finance ministry, even as his lack of expertise means he may need them more.

Kan has been been vocal on the economy since the Democratic Party won control in an election last August that ended more than 50 years of nearly unbroken rule by the conservative Liberal Democratic Party (LDP).

Last year, he warned Japan faced a serious risk of another recession and said the budget for the 2010/11 fiscal year should remain stimulative for the economy. That contrasts with Fujii, who leaned more toward fiscal restraint.

The new minister gave no clues on his policy plans on Wednesday, but despite the perception that he is not as much a fiscal hawk as Fujii, he is not necessarily an advocate of big spending.

Known for his quick temper, he snapped at outspoken Banking Minister Shizuka Kamei when he called for huge budget spending that would have forced the government to issue a large amount of new bonds, boosting public debt at a time when such worries were putting pressure on bond yields.

Kan is also close to influential party No.2 Ichiro Ozawa, who helped persuade Hatoyama to drop a key campaign pledge so the government could limit spending in the budget.

The new minister is among the most vocal critics in the cabinet of the Bank of Japan.

He criticized the central bank's economic view as too rosy and pressured it to do more to support growth.

"With this appointment the pressure on the Bank of Japan will continue and could even increase," said Frederic Neumann, a senior Asia economist at HSBC.

"We won't see an immediate reaction from the central bank. But it does raise the chance over time that we get a few more accommodative measures."

Little is known on Kan's views on currency policy but he is expected to be less tolerant of a strong yen, which hurts exports.

In November, when the yen surged to a 14-year high against the dollar, Kan said he hoped the yen would weaken and that the government would try to slow its appreciation, although he did not elaborate on how that could be done.

Kan became Japan's most popular politician for a time when he battled bureaucrats as health minister in 1996 to expose a scandal over HIV-tainted blood products.

He forced officials to hand over files about untreated blood products that had infected nearly 1,500 people with HIV in the 1980s, winning compensation for victims and convictions for those responsible.

His popularity among voters has since waned, but the former grassroots activist is often mentioned as a possible successor to Hatoyama, should he be forced out in a simmering funding scandal.

© 2017 Thomson/Reuters. All rights reserved.

 
1Like our page
2Share
FinanceNews
Japan's new finance minister, Naoto Kan, is a fiery ruling party heavyweight who faces the tough task of trying to stimulate the economy without upsetting investors by bloating an already huge public debt. Kan, 63, replaces elderly Hirohisa Fujii, a budget expert and...
Japan,Names,Fiery Battler,New Finance Minister
649
2010-48-06
Wednesday, 06 Jan 2010 01:48 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved