World News

SNAP ANALYSIS: Japan finance minister departure hurts PM

TOKYO (Reuters) - Japan’s finance minister, forced to deny he was drunk at a G7 news conference, said on Tuesday he would resign after budget bills were passed, the latest blow to Prime Minister Taro Aso in an election year.

Opposition parties had threatened to enact a censure motion in parliament’s upper house against Shoichi Nakagawa to press him to step down.

* Nakagawa’s offer to resign after the enactment of budget bills -- which could take weeks -- has not satisfied the main opposition Democratic Party, which together with smaller allies control parliament’s upper house. The Democrats, sensing they can win an election that must be held this year, will keep pressing for Nakagawa to quit immediately or for Aso and his entire cabinet to resign.

* There are no obvious candidates to replace Nakagawa, with the exception of current Economics Minister Kaoru Yosano.

* The planned resignation is the latest blow to Aso’s credibility among voters and could increase pressure on the prime minister himself to step down. But with no obvious successors in the ruling Liberal Democratic Party (LDP) and the public fed up with a string of resignations by their leaders, Aso might hold on for now.

* The resignation adds to a political fuss in Japan that is distracting policy makers from dealing with a worsening recession and damaging Aso’s credibility at home and abroad. The global downturn has slashed demand for Japan’s cars, tech and other exports and economists warn of more pain ahead, and there are calls for further stimulus steps to rescue the world’s second biggest economy.

* Bills needed to implement spending for an extra budget for the year to March 31 are stuck in the opposition-controlled upper house, while the lower chamber is debating the state budget for 2009/10, which typically would be enacted by the end of March but might also be delayed by opposition parties.

Writing by Linda Sieg, Editing by Dean Yates