Japan: Yoshihiko Noda appointed new Prime Minister
August 30, 2011
On 26 August, Naoto Kan announced his resignation as Prime Minister amid rising criticism of his crisis management following the 11 March earthquake. As a result, the Democratic Party of Japan, which currently holds a comfortable majority in the lower house, called an internal election to choose a new leader. In the second round, Finance Minister Yoshihiko Noda won the race to succeed Naoto Kan and on 30 August was officially appointed as the sixth prime minister in five years. Yoshihiko Noda will have to struggle against the soaring yen, accelerate reconstruction of the areas affected by the quake, revive the faltering economy and build bridges with the opposition, which controls the upper house. Noda will have to move forward to pass the long-awaited third extra budget, which is expected to amount to around JPY 12.0 trillion (USD 160 billion). Even though Noda considers tax hikes to pay for the reconstruction, he is likely to moderate his stance in order to reach the greatest consensus in both chambers. The public debt burden currently amounts to around 200% of GDP. On 24 August, Moody's lowered the Japanese debt rating from Aa2 to Aa3 with a stable outlook. The agency warned that weak prospects for economic growth and the lack of long-term fiscal strategies make it difficult for Japan to slow the growth of debt-to-GDP.