Japanese Finance Minister Yoshihiko Noda has won Japan’s ruling Democratic Party leadership race today, paving the way for the 54-year old to become the country’s next prime minister following the resignation of previous PM Naoto Kan last Friday due to public discontent with his handling of the March earthquake and tsunami and the subsequent nuclear meltdown that followed.
Noda will become Japan’s sixth prime minister in five years and the third prime minister since the Democratic Party came to power two years ago.
After his victory Noda said “I’m firmly resolved to carry this heavy burden and ask for your support. Let’s brace ourselves and work to achieve stable, reliable government.”
Market reaction to Noda’s win is that fiscal reforms will progress, since he is viewed as a fiscal hawk and very aggressive on higher taxes. As finance minister since June 2010 he has pushed for the government’s proposal to double the 5 percent sales tax by 2015 to fund growing social welfare costs and curb massive public debt in the world’s third largest economy. Just a week ago Moody’s downgraded Japan’s credit rating based on “weak” prospects for economic growth that will make it difficult for the government to contain the world’s largest public debt burden. Markets are optimistic Noda will now take care of this.
Noda has also been a strong proponent in taking firm steps to curb yen strength which has been hurting Japan’s exports. These measures include intervention against excessive and rapid currency moves and wants to work closely with the Bank of Japan.