New finance boss to heal Japan’s woes

JAPAN has appointed a new finance minister to steer its economic recovery after his predecessor quit due to health problems.

Japanese Prime Minister Yukio Hatoyama said deputy Prime Minister Naoto Kan will take over the finance brief from Hirohisa Fujii, who resigned yesterday.

Kan will spearhead Tokyo’s efforts to combat deflation, a fragile economy and huge public debts.

Fujii, 77, was admitted to hospital for tests last week amid concerns about tiredness and high blood pressure.

He later said he was worn out by wrangling over the final stages of Japan’s budget.

The dollar gained against the yen after the announcements, rising one per cent to 92.62 yen in late morning trading in New York.

Analysts, however, predicted little impact on Japan’s currency policy, which is controlled by the finance ministry.

Kan, 63, has been vocal about the economy since the Democratic party ousted the Liberal Democrats in August.

But as a former health minister that lacks budget and tax expertise, he may take a less predictable approach than Fujii, worrying bond investors who want Japan to keep spending in check so it slows the public debt’s swift rise towards 200 per cent of GDP.

As national strategy minister, Kan helped oversee the budget and set fiscal priorities.

But he is seen as less of a fiscal hawk than his predecessor, and may not be as keen to fight calls for higher spending to boost the economy.

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

As one of the government’s more experienced members, Fujii often served as the voice of fiscal restraint.

He backed a policy of sticking to a cap of around 44 trillion yen on a bond issuance in the budget.