TOKYO - Japan's next prime minister, Yukio Hatoyama, said on Monday he would not formally announce his choices for key cabinet posts until talks on a proposed coalition with two parties were completed.
Hatoyama, who will take office on September 16 following his Democratic Party's stunning election win, has already selected former health minister Naoto Kan, 62, to head a powerful new agency to oversee the budget process and set policy priorities as well as party No. 2 executive Katsuya Okada, 56, as foreign minister.
Japanese media have also reported that Hirohisa Fujii, 77, would probably be chosen to return to the role of finance minister, which he held briefly in the early 1990s.
We are not at the stage where we can announce (personnel matters), Hatoyama told reporters after party executives met, adding an agreement with potential coalition partners needed to be reached first, perhaps by Tuesday.
Last week's huge election win by the Democratic Party of Japan (DPJ) ended half a century of almost unbroken rule by the Liberal Democratic Party, and breaks a deadlock in parliament.
Despite a landslide victory in the poll for parliament's powerful lower house, the Democrats need cooperation from the tiny Social Democrats and the conservative People's New Party to keep control of the upper chamber to enact laws smoothly.
The Democrats have promised to focus spending on consumers, cut waste and reduce the power of bureaucrats over policy-making.
SOOTHING DEBT WORRIES
Some analysts worry that the incoming government's spending plans will inflate a public debt already about 170 percent of GDP, the highest among advanced countries.
But Fujii's appointment as finance minister might ease bond market worries about more debt issuance, since he is viewed as well aware of the need to restore fiscal discipline.
Fujii, who served as finance minister in an anti-LDP coalition from 1993-1994, told Reuters last week that Tokyo must not intervene in the foreign exchange markets to limit the yen's rise unless currency rates moves abnormally and that a strong yen was good for Japan as it curbs import costs.
The new National Strategy Bureau, to include both public and private sector officials, will be tasked with reforming what the Democrats say is a cumbersome policy-making system that had relied heavily on recommendations from bureaucrats and allowed the ruling party to compete with the cabinet on decisions.
Kan's experience battling bureaucrats to expose a cover-up of HIV-tainted blood products when he was health minister in 1996 could stand him in good stead, but analysts say he must also find a way to cooperate with elite ministry officials.
The foreign minister post is also being closely watched because of concerns about the U.S.-Japan alliance after the Democrats vowed to take a more independent diplomatic course.
Okada got a taste of diplomacy when he sought to assure U.S. officials in the run-up to the election that no big shift in relations was in store if his party took power.
(Additional reporting by Yoko Nishikawa; Editing by Linda Sieg and Sugita Katyal)