TOKYO, March 20 (Reuters) – The nomination of a new Bank of Japan governor may be delayed until April as parliament will be preoccupied with tax measures until then, media said on Thursday, blaming political parties for the vacuum at the central bank.
The Bank of Japan is without a proper governor for the first time in 80 years as the opposition-led upper house of parliament voted down two candidates nominated by the government before Toshihiko Fukui’s final day in office on Wednesday.
Newly appointed Deputy Governor Masaaki Shirakawa is acting governor until the government and opposition can agree on a successor.
The daily Yomiuri Shimbun reported that the government would want to have a new governor at the central bank by early April, before its next policy-setting meeting on April 8-9 and a Group of Seven (G7) meeting expected around April 12.
Financial daily Nikkei reported that a senior government official suggested the government would probably put forward a new candidate for the job in April.
“For the time being, we have to give our priority to tax bills,” the Nikkei quoted the official as saying, referring to tax measures that the government wants to renew before they expire on March 31, including a gasoline levy.
The main opposition Democratic Party argues that this tax, revenue from which is devoted mainly to road construction, is a symbol of the ruling Liberal Democratic Party’s penchant for wasteful public works and wants it abolished.
The Yomiuri was worried that an interim governor might not have the authority to take decisions at a particularly difficult time for the economy, in the middle of a global credit crisis.
“Can Shirakawa, as acting governor, implement bold and urgent policies in the heat of a financial system emergency, for instance?” the daily asked in an editorial.
“If the acting governor has to fill in for the governor for an extended period, market players will lose faith in the prospects for Japan’s financial policies. In turn, confidence in the Bank of Japan would wane.”
SNAP ELECTION?
The media blamed both the government and opposition for the failure to appoint a governor.
“Prime Minister Yasuo Fukuda, who has the authority to nominate a candidate to be the bank’s chief, must do everything in his power to untangle this mess as quickly as possible,” the Yomiuri said.
“The opposition bloc, which shot down the nominations in the upper house, must bear its share of responsibility for the negative fallout brought about by the leadership vacuum at the central bank.”
Describing the political deadlock as “an unprecedented, abnormal situation”, the Asahi newspaper said the outcome could be a snap general election.
“There must be many people who think that way,” it said in an editorial.
The Yomiuri lamented the stalemate. “The deterioration in the functions of the nation’s political system, which brought about this disturbing situation, cannot be tolerated,” it said.
Some political pundits think Fukuda could call an election after hosting a Group of Eight summit on July 7-9.
No election need be held until 2009 and the ruling bloc would be wary of a poll that could result in the loss of its two-thirds majority in the lower chamber. This allows it to override upper house vetoes of legislation, though not personnel appointments.
A general election would not change the political landscape unless the opposition won a majority and thus took control of both houses. No upper house poll has to be held until 2010.
