If the cronyism scandal that has paralyzed the Diet in Japan ends up swallowing veteran Finance Minister Taro Aso, a government hooked on radical reflationary polices would lose its strongest defender of fiscal prudence. Investors should watch out. The scandal has still to play out and markets haven’t priced
If the cronyism scandal that has paralyzed the Diet in Japan ends up swallowing veteran Finance Minister Taro Aso, a government hooked on radical reflationary polices would lose its strongest defender of fiscal prudence.
Investors should watch out. The scandal has still to play out and markets haven’t priced in just how much damage it could inflict on Prime Minister Shinzo Abe’s government.
“Aso has been a restraining voice against growing calls in the administration for big fiscal spending and radical steps,” said Koichi Haji, chief economist at NLI Research Institute.
“If Aso were to resign, the next finance minister would have big shoes to fill.”
Abe and Aso are under fire over the finance ministry’s admission that it had altered records of a discounted sale of state-owned land to a school operator with ties to Abe’s wife.
Opposition lawmakers have called for Aso’s head and are boycotting Diet debate over budget proposals for the coming financial year.
With his enemies circling, Aso has refused to step down and Abe has defended an ally he was counting on to help him secure a third term as leader of the ruling Liberal Democratic Party (LDP) when the party votes in September.
But there are growing calls even from within the LDP for Aso to fall on his sword. A public opinion poll by Sankei showed 71 percent of respondents thought he should go.
“This is a serious threat to democracy,” Yoshimitsu Kobayashi, chairman of Japan’s influential business lobby Keizai Doyukai, told a news conference on Tuesday. “If you’re a head of a private company, you would resign regardless of whether you had knowledge of the misconduct or not.”
It is an awkward time for export-driven Japan to have a finance minister’s future hanging in the balance, with the world fearful that U. S. President Donald Trump may have fired the first shots in a global trade war by placing hefty tariffs on steel and aluminum imports.
Aso already appears set to skip a Group of 20 finance leaders’ gathering next week.
