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September 16, 2009

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Hatoyama picks Fujii as finance minister

JAPAN'S next prime minister has picked veteran lawmaker Hirohisa Fujii as finance minister, media reported yesterday, adding a dose of experience and fiscal caution that helped ease market worries about the untested government's spending plans.

Yukio Hatoyama will be appointed prime minister today after a big election win brought to power a government pledged to put more money in the hands of consumers, cut waste and ease bureaucrats' control over policy-making.

The expected appointment of 77-year-old Fujii, who served as finance minister in 1993-1994, was welcomed by analysts worried that new government spending programs - such as child allowances and toll-free expressways - will boost issuance of Japanese government bonds as Japan struggles to emerge from recession.

"The appointment is a positive move for the bond market as Fujii has placed a strong emphasis on trying to tap sources of financing so the government does not have to issue more debt," said Noriyuki Fukuda, a Morgan Stanley fixed-income strategist.

Hatoyama's Democratic Party of Japan has promised not to raise Japan's 5 percent sales tax for the next four years while the government focuses on cutting waste, but Fujii has called for discussion of an increase to fund the soaring social security costs of an aging society.

Hatoyama, the 62-year-old rich grandson of a premier, has already chosen Naoto Kan, an ex-party leader and former health minister, to head a powerful new agency tasked with overseeing the budget process and setting policy priorities.

That is a break from the previous, Liberal Democratic Party government, that relied heavily on bureaucrats during its almost unbroken half century rule.

Hatoyama has also said Katsuya Okada, another former party leader, would become foreign minister, a post being closely watched because of concerns about the US-Japan alliance given the Democrats' pledge to adopt a diplomatic course more independent of close ally Washington.

The choices will give ballast to a Cabinet that will inevitably be composed largely of lawmakers who have never served in government, analysts said. "There is a lack of depth at the top, but he is taking some of the most talented and experienced people and putting them in key posts," said Jeffrey Kingston, director of Asian studies at Temple University's Japan campus.


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