TOKYO — Dealing another blow to the fledgling government, the Japanese finance minister resigned Wednesday, leaving Prime Minister Yukio Hatoyama to appoint a successor with little fiscal experience to grapple with financing an ambitious campaign agenda while tackling a spiraling public debt and a fading economic recovery.
Deputy Prime Minister Naoto Kan, a founder of the governing Democratic Party and the minister in charge of economic policy and state strategy, will succeed Hirohisa Fujii as finance minister, Mr. Hatoyama said.
Mr. Fujii, 77, cited fatigue and deteriorating health in tendering his resignation, which came just as the government prepared to shepherd through Parliament a record $1 trillion budget for the fiscal year that starts next April.
Mr. Kan, 63, a former activist and champion of reducing the authority of bureaucrats, is seen as having the political clout but none of the financial expertise of Mr. Fujii. A fiscal conservative and former Finance Ministry bureaucrat, Mr. Fujii had been considered a valuable experienced hand in the cabinet of Mr. Hatoyama, whose Democratic Party swept to power in September.
Mr. Fujii had also been seen by investors as a reassuring check on the left-leaning government's spending plans. In recent months he had wrangled with ministries over budget cuts as Japan struggled to rein in its runaway public debt, which is close to twice the size of the gross domestic product. But the Democrats also want to finance an ambitious social agenda to help the country's households, including payments to families with children and free public high school education. The agenda formed the cornerstone of their campaign agenda.
Some analysts attributed Mr. Fujii's departure to a rift with the Democratic Party's powerful secretary general, Ichiro Ozawa, who has recently pushed through a series of changes to the government's fiscal policy. Mr. Ozawa last month publicly criticized Mr. Fujii's budgeting process, questioning whether the finance minister was doing enough to curb the power of Japanese bureaucrats, who have maintained a stranglehold on the country's budget for decades.
It will now be up to Mr. Kan to usher the budget through Parliament, which convenes later this month, and to draft additional stimulus packages that analysts expect will be necessary to sustain an economic recovery.
Mr. Kan has argued for more stimulus measures, saying that Japan faced a slide back into recession. But in recent months, he has also preached caution against a budget so big it could sharply increase the nation's debt.
Mr. Hatoyama said he believed Mr. Kan to be well up to the task.
"I wanted to appoint a successor who has worked most closely with the finance minister," Mr. Hatoyama said.
Mr. Kan later said that he intended "to do the utmost as finance minister."
Still, analysts called Mr. Fujii's resignation a big setback for Mr. Hatoyama's government.
"Mr. Fujii was one of Mr. Hatoyama's most active and visible ministers," said Yoshiaki Kobayashi, professor of Japanese politics at Keio University. "Mr. Kan is a good politician, but fiscal and economic policy is not his expertise at all."
"Mr. Kan will focus more on meeting campaign pledges than fiscal policy, which is something Mr. Fujii had balanced well until now," Mr. Kobayashi added. "That could mean a worsening of government finances, which could hurt the new government's credibility."
Others said that Mr. Kan's inexperience could mean more clout for bureaucrats.
"There remains uncertainty in terms of Kan's capability of managing the fiscal and the currency policies," Masaaki Kanno, an economist at JPMorgan Securities Japan, said in a note. "To compensate Mr. Kan's lack of experience in conducting fiscal policy, he will likely rely more on advice from senior staff of the Ministry of Finance."
Mr. Fujii, who had been suffering from exhaustion and high blood pressure, checked into a hospital on Dec. 28, and had been commuting to work from there.
Mr. Hatoyama had initially urged Mr. Fujii to remain in his post to present the coming fiscal year's budget to Parliament. But the prime minister said late Wednesday that Mr. Fujii had tendered his resignation and that the government had no choice but to accept.
"There is nothing you can do on matters of health, so we have decided to accept," Mr. Hatoyama said.
Yoshito Sengoku, now administrative reform minister, will take on Mr. Kan's previous portfolio as national strategy minister, Mr. Hatoyama said.
Public approval ratings for Mr. Hatoyama's government have slid from post-election highs of more than 70 percent to less than 50 percent in recent polls.
Mr. Kan will be the sixth Japanese finance minister since August 2008. Less than a year ago, then Finance Minister Shoichi Nakagawa resigned in February after appearing drunk at an international meeting in Rome and was found dead at his home in October. Kaoru Yosano, a veteran politician, acted as finance minister until the Liberal Democrats fell from power in September.
Deputy Prime Minister Naoto Kan, a founder of the governing Democratic Party and the minister in charge of economic policy and state strategy, will succeed Hirohisa Fujii as finance minister, Mr. Hatoyama said.
Mr. Fujii, 77, cited fatigue and deteriorating health in tendering his resignation, which came just as the government prepared to shepherd through Parliament a record $1 trillion budget for the fiscal year that starts next April.
Mr. Kan, 63, a former activist and champion of reducing the authority of bureaucrats, is seen as having the political clout but none of the financial expertise of Mr. Fujii. A fiscal conservative and former Finance Ministry bureaucrat, Mr. Fujii had been considered a valuable experienced hand in the cabinet of Mr. Hatoyama, whose Democratic Party swept to power in September.
Mr. Fujii had also been seen by investors as a reassuring check on the left-leaning government's spending plans. In recent months he had wrangled with ministries over budget cuts as Japan struggled to rein in its runaway public debt, which is close to twice the size of the gross domestic product. But the Democrats also want to finance an ambitious social agenda to help the country's households, including payments to families with children and free public high school education. The agenda formed the cornerstone of their campaign agenda.
Some analysts attributed Mr. Fujii's departure to a rift with the Democratic Party's powerful secretary general, Ichiro Ozawa, who has recently pushed through a series of changes to the government's fiscal policy. Mr. Ozawa last month publicly criticized Mr. Fujii's budgeting process, questioning whether the finance minister was doing enough to curb the power of Japanese bureaucrats, who have maintained a stranglehold on the country's budget for decades.
It will now be up to Mr. Kan to usher the budget through Parliament, which convenes later this month, and to draft additional stimulus packages that analysts expect will be necessary to sustain an economic recovery.
Mr. Kan has argued for more stimulus measures, saying that Japan faced a slide back into recession. But in recent months, he has also preached caution against a budget so big it could sharply increase the nation's debt.
Mr. Hatoyama said he believed Mr. Kan to be well up to the task.
"I wanted to appoint a successor who has worked most closely with the finance minister," Mr. Hatoyama said.
Mr. Kan later said that he intended "to do the utmost as finance minister."
Still, analysts called Mr. Fujii's resignation a big setback for Mr. Hatoyama's government.
"Mr. Fujii was one of Mr. Hatoyama's most active and visible ministers," said Yoshiaki Kobayashi, professor of Japanese politics at Keio University. "Mr. Kan is a good politician, but fiscal and economic policy is not his expertise at all."
"Mr. Kan will focus more on meeting campaign pledges than fiscal policy, which is something Mr. Fujii had balanced well until now," Mr. Kobayashi added. "That could mean a worsening of government finances, which could hurt the new government's credibility."
Others said that Mr. Kan's inexperience could mean more clout for bureaucrats.
"There remains uncertainty in terms of Kan's capability of managing the fiscal and the currency policies," Masaaki Kanno, an economist at JPMorgan Securities Japan, said in a note. "To compensate Mr. Kan's lack of experience in conducting fiscal policy, he will likely rely more on advice from senior staff of the Ministry of Finance."
Mr. Fujii, who had been suffering from exhaustion and high blood pressure, checked into a hospital on Dec. 28, and had been commuting to work from there.
Mr. Hatoyama had initially urged Mr. Fujii to remain in his post to present the coming fiscal year's budget to Parliament. But the prime minister said late Wednesday that Mr. Fujii had tendered his resignation and that the government had no choice but to accept.
"There is nothing you can do on matters of health, so we have decided to accept," Mr. Hatoyama said.
Yoshito Sengoku, now administrative reform minister, will take on Mr. Kan's previous portfolio as national strategy minister, Mr. Hatoyama said.
Public approval ratings for Mr. Hatoyama's government have slid from post-election highs of more than 70 percent to less than 50 percent in recent polls.
Mr. Kan will be the sixth Japanese finance minister since August 2008. Less than a year ago, then Finance Minister Shoichi Nakagawa resigned in February after appearing drunk at an international meeting in Rome and was found dead at his home in October. Kaoru Yosano, a veteran politician, acted as finance minister until the Liberal Democrats fell from power in September.
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