Tokyo - Japan's prime minister named his deputy Naoto Kan as finance minister on Wednesday, replacing 77-year-old Hirohisa Fujii who is stepping down for health reasons in a blow to the three-month-old government.
Prime Minister Yukio Hatoyama, struggling to reverse a slump in his popularity, said Fujii's resignation was unavoidable due to exhaustion after months of hard work drawing up the national budget.
"The doctors' medical certificate said it is difficult for him to execute his official duty as a minister. I have no choice but to take the doctors' diagnosis seriously," Hatoyama told reporters.
"I believe Deputy Prime Minister Kan can fully handle the job," he added.
Kan, 63, is a co-founder of the governing Democratic Party of Japan (DPJ) and reputed for his tough legislative debating skills.
He is best known for his work as a health minister in the 1990s, when he pushed civil servants to disclose the ministry's involvement in allowing the use of imported blood products tainted with HIV.
Nicknamed "irritable Kan" for his sometimes short temper, he is a one-time grassroots activist and former leader of the DPJ, which he co-launched in 1998 along with Hatoyama. He will also remain deputy prime minister.
"I accepted the prime minister's offer, telling him that I am still immature in many aspects but that I will do my best to fill the place left by Minister Fujii," Kan told reporters.
"With everyone's help, I resolutely take it upon myself to continue what Minister Fujii had set out to do, particularly with the budget."
Fujii, who has railed against wasteful government spending, was hospitalised on December 28 suffering from fatigue and high blood pressure after months of wrangling over the national budget.
The veteran politician was picked by Hatoyama as finance minister less than four months ago, returning to a post he held briefly in the early 1990s.
He was one of the few cabinet members with previous government experience and his departure is setback to Hatoyama's efforts to revive the world's number two economy, reeling from its worst downturn in decades.
Hatoyama took office in mid-September with a vow to tackle wealth inequalities, curb the power of Japan's bureaucrats and pursue a more equal relationship with Washington.
But polls show that many voters fear he lacks leadership, after he postponed a decision on where to move a key US military base and backtracked on a manifesto pledge to scrap a petrol tax.
Tokyo stocks closed up 0.46% earlier Wednesday as investors reacted calmly to the possibility of Fujii stepping down.
"I do not expect any substantial impact on the Japanese economy as a whole," said Yutaka Harada, chief economist at Daiwa Research Institute.
But the yen fell as traders speculated that Fujii's successor might not be so tolerant of the currency's recent strength.
Fujii has repeatedly said that in principle Tokyo should refrain from market intervention to weaken the yen and protect exporters.
"The market has taken Fujii's policies favourably," said Hideaki Inoue, chief manager of forex trading at Mitsubishi UFJ and Banking Corp.
- AFP