Japan's Prime Minister Naoto Kan (3rd R) raises his fists with party members during an annual party convention of the ruling Democratic Party of Japan in Chiba, east of Tokyo, January 13, 2011. Kan will appoint former administrative reform minister Yukio Edano as his de facto deputy and offer ex-finance minister Kaoru Yosano, a fiscal conservative, a government post, Japanese media said a day ahead of the changes.
Japan's prime minister appointed a fiscal hawk to a key post and replaced his deputy in a cabinet revamp on Friday to cope with a divided parliament and tackle reforms to rein in public debt, but hurdles to success are high.
Drafting Kaoru Yosano, an advocate of raising the 5 percent sales tax, as economics minister signals Prime Minister Naoto Kan is serious about reforms needed to fund bulging social welfare costs and rein in the huge public debt, as well as about trade liberalization sought by business but opposed by farm lobbies.
But with opposition parties able to block bills in the upper house of parliament, Kan's own Democratic Party of Japan (DPJ) split over the sales tax and free trade and the new cabinet not necessarily united, skepticism over prospects for progress ran deep.
Appointing Yosano would "give an impression that Japan's fiscal and tax reform will progress, led by the finance ministry. And this will probably ease concerns to some degree about supply and demand in the bond market," said Akitsugu Bandou, a senior economist at Okasan Securities.
"But the government will continue to face a severe situation because of political deadlock, and the cabinet reshuffle is not necessarily going to change the situation that the DPJ lacks political power," Bandou said.
Kan also appointed former administrative reform minister Yukio Edano as his chief cabinet secretary, while retaining Finance Minister Yoshihiko Noda, Foreign Minister Seiji Maehara and banking minister Shozaburo Jimi.
Replacing Yoshito Sengoku with Edano clears the path for debate on the state budget for the year from April, but it is unclear if Kan can find enough votes to pass enabling laws.
UP TO THE JOB?
"The ruling party has to pass the budget first. We can only begin thinking of the market implications of the reshuffle when the ruling party is running parliament smoothly," said Hidenori Suezawa, chief strategist at Nikko Cordial Securities.
Kan has also sought multi-party talks on tax and social welfare reform with an eye to outlining changes by June, but opposition parties say they want to see DPJ proposals first.
Some analysts worry that the 46-year-old Edano, who made his name in a former cabinet post in charge of cutting waste, may not be up to the demands of his new job.
"He can be an easy target (for opposition parties) because of a tendency to straight-talk but also to committing gaffes and offending people unnecessarily," said Sophia University professor Koichi Nakano.
Opposition parties had threatened to boycott debate on the budget for 2011/12, starting on April 1, unless Sengoku and Transport Minister Sumio Mabuchi, censured by the upper house in November for their handling of a row with China, were sacked.
The government can enact the budget because the DPJ controls the powerful lower house, but the opposition can block bills needed to implement the spending in the upper chamber.
Edano has also been a critic of DPJ powerbroker Ichiro Ozawa and his appointment could deepen a rift in the party over the veteran strategist, who faces indictment over a funding scandal.
Read More
http://www.reuters.com/article/idUSTRE70D0P620110114
No comments:
Post a Comment