Japan's Finance Minister Yoshihiko Noda postponed a reported plan to announce on Tuesday his bid to replace unpopular Prime Minister Naoto Kan, saying he would focus on confronting global financial market turmoil. Japanese media said Noda, who favours raising the sales tax to fund bulging social security costs, had intended to announce his candidacy for a party leadership race at a meeting of Democratic Party allies later in the day.
The Sankei newspaper also said Noda would quit his post after parliament passes a bill allowing the government to borrow more, a move that would raise pressure on Kan to resign. Noda, however, told reporters he would not declare his candidacy on Tuesday and denied he would step down after enactment of the key bill, now likely later this month.
"There are extraordinary media reports that I would quit after the passage of the deficit bill, but this isn't my thinking at all," Noda said. "Leaving my position as finance minister now could impact financial markets, so this is unthinkable."
Noda has been expected to run in the Democratic Party election once the unpopular Kan resigns. But global economic concerns and worries about the impact of a strong yen on the world's third-largest economy forced him to delay his move, a political source said. "It would be politically difficult to announce his candidacy in this situation," the source said, noting the original timing meant to precede publication of a policy statement in a monthly magazine due out on Wednesday.
Kan, under fire for his handling of the nuclear crisis at a tsunami-crippled power plant and voter ratings sagging at well below 20 percent, has said he will hand over to his Democratic Party's younger generation. But he has not specified when, and rivals in his party appear to be growing frustrated. Already Japan's fifth premier in as many years, Kan has set three conditions for keeping his pledge to resign - and some wonder whether he will quit even once those are met.
One of those conditions, the enactment of an extra budget to help fund recovery from the massive March earthquake and tsunami, has already been met. Progress was made on Tuesday on a second condition - enactment of a bill allowing the government to borrow more to fund this year's $1 trillion budget.
Chief Cabinet Secretary Yukio Edano told a news conference he welcomed an agreement reached between the Democratic Party's secretary general and opposition counterparts to change key ruling party spending pledges, clearing the way to pass the bond issuance bill. A committee in parliament's lower house was to vote on the bill on Wednesday, Jiji news agency said.
Kan, who is advocating Japan wean itself from reliance on nuclear power, also wants parliament to pass a law promoting renewable sources of energy such as solar power before he quits. If Noda or other key cabinet ministers resigned, it would boost pressure on Kan to keep his promise even if the two bills are not enacted before the end of the current parliament session on August 31.
"The scenario is that Noda, (Trade Minister Banri) Kaieda, and (Transport Minister Akihiro) Ohata all resign together," independent political analyst Hirotaka Futatsuki said. "Then they bring forward the party leadership vote." Not everyone was convinced the script would play out, especially in light of the latest bout of global financial turmoil sparked by Standard & Poor's sovereign ratings downgrade of the United States.