TOKYO (MNI) – Japanese Prime Minister Naoto Kan will appoint former
Finance Minister Kaoru Yosano as Economic and Fiscal Policy Minister
when he reshuffles his cabinet later today, a move aimed at breaking the
impasse on starting parliamentary debate on the next fiscal year’s
budget, newspapers reported on Friday.

In his new year’s remarks made last week, Kan said he wants to
create “the most powerful team” ahead of parliamentary debate on the
budget, which is designed to support the economy. Kan is widely expected
to reappoint key members including Finance Minister Yoshihiko Noda.

Opposition parties have demanded that both Chief Cabinet Secretary
Yoshito Sengoku, a close ally of Kan’s, and Land, Infrastructure,
Transport and Tourism Minister Sumio Mabuchi resign over their handling
of Japan’s territorial dispute with China, threatening to boycott budget
debate.

The two lawmakers were censured in the opposition-controlled upper
house of parliament in November.

Yukio Edano, the ruling Democratic Party of Japan’s deputy
secretary-general, will replace Sengoku, who will become the acting
president of the DPJ.

Yosano served as Finance Minister in 2009, Economic and Fiscal
Policy Minister between 2008 and 2009, and Chief Cabinet Secretary in
2007, all under governments led by the Liberal Democratic Party.

Yosano is a veteran lawmaker who left the Sunrise Party of Japan on
Thursday. He helped found the small party last year after leaving the
LDP, which is now in the opposition camp after losing power to the
Democratic Party of Japan in 2009.

With the appointment of Yosano, an advocate for a sales tax hike
aimed at supporting the nation’s public pensions and medical services,
Kan seeks to launch cross-party debate on revamping the tax system, the
Nikkei and other dailies reported.

Kan told reporters late on Thursday that Yosano’s political
platform is akin to the DPJ’s thinking on the fiscal and social security
system.

Kan has called for a tax hike to allow the government to secure a
stable funding source for additional public spending on job creation,
which would help Japan move out of stubborn deflation.

His abrupt call for a sales tax increase during parliamentary
election campaigns was partly to blame for the DPJ’s loss in the upper
house election in July last year.

In today’s cabinet reshuffle, Kaieda will take over as the head of
the Ministry of Economy, Trade and Industry from Akihiro Ohata, who will
move into the top seat at the Ministry of Land, Infrastructure,
Transport and Tourism, according to the reports.

Kan, who took office in June, last reshuffled his cabinet and top
ruling party lineup in September, when he picked his close allies to key
posts and further reduced the influence of rival Ichiro Ozawa, who lost
to Kan in the party leadership race at the time.

Katsuya Okada, who will remain as secretary-general of the DPJ,
said last weekend that the government is flexible about making some
changes to its fiscal 2011 budget plans through parliamentary debate
with opposition parties.

He also told public broadcaster NHK that the 150-day ordinary Diet
session will be called sometime between Jan. 21 and Jan. 28 after Kan
reshuffles his cabinet.

The DPJ is willing to negotiate with the opposition camp on related
bills for the fiscal 2011 budget, he said. The opposition-controlled
upper house could reject those and other important bills while the DPJ
has a majority in the more powerful lower house of the hung parliament.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4835 **

[TOPICS: M$J$$$,M$A$$$,MGJ$$$]