Japan PM Vows to fill BOJ Chief Gap, But Delay Seen

Prime Minister Yasuo Fukuda, under fire over an unprecedented vacancy at the top of the Bank of Japan, said it was his "mission" to fix the problem soon, but media reported a new nomination could be delayed until April.


"To have a vacancy at the top of the Bank of Japan in the midst of an increasing sense of uncertainty about the world financial markets and economy is extremely serious and I feel a heavy responsibility," Fukuda wrote in his weekly e-mail magazine.

"This situation sends a message internationally that Japanese politics cannot make important decisions."

The BOJ is without a proper governor for the first time in 80 years after the opposition-controlled upper house of parliament voted down two government nominees 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. Appointees need approval of both houses of parliament.

Fukuda, whose support has sagged on doubts about his leadership, took aim at the opposition Democratic Party for its role in the deadlock, but added it was his job to fix the problem.

"That there is no BOJ governor is my responsibility, but it is also my mission to fix this situation at the BOJ and in politics as soon as possible, and I think that is my responsibility," he wrote in the weekly message.

Media said, however, that parliamentary wrangling over tax measures might delay a new nomination until April.

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.

Gsaoline Levy

Financial daily Nikkei reported that a senior government official has 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 Democratic Party argues the tax, revenue from which is earmarked for building roads, is a symbol of the ruling party's penchant for wasteful public works and wants it abolished.

The Yomiuri 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.

"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," the daily said in an editorial.

Media blamed both the government and opposition for the mess.

Describing the political deadlock as "an unprecedented, abnormal situation", the Asahi newspaper said the outcome could be a snap general election.

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.