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March 13, 2018

By Leika Kihara and Tetsushi Kajimoto

TOKYO (Reuters) – Japan’s finance minister is considering skipping a Group of 20 finance leaders’ gathering in Buenos Aires next week, Japanese media reported, as a suspected cover-up of a cronyism scandal paralyzes parliament and puts his job on the line.

Premier Shinzo Abe and his close ally, Finance Minister Taro Aso, are under pressure over the finance ministry’s announcement it had altered records of a discounted sale of state-owned land to a school operator with ties to Abe’s wife.

Aso missing the G20 gathering would be the latest blow the scandal is inflicting on the Abe administration’s agenda, with the parliamentary stalemate also seen delaying reforms to boost long-term economic growth.

“The firestorm surrounding the cover-up and the land sale will continue to inhibit the administration’s ability to move its agenda through the Diet,” said Tobias Harris, vice president at Teneo Intelligence, a global advisory firm.

Aso was scheduled to attend the G20 gathering set for March 19-20, where finance leaders from major economies will debate global economic developments, rising fears of protectionism, and cryptocurrencies.

The Kyodo news agency, quoting ruling party lawmakers, reported on Monday that Aso – a veteran among G20 finance leaders – is considering skipping the meeting as opposition parties boycott parliamentary debate on next fiscal year’s budget.

When asked whether he may skip the G20, Aso told reporters on Tuesday the decision will depend on the “present parliamentary situation”.

“It is important to fully cooperate with the ongoing investigation. To prevent a recurrence, we’ll continue to look into the matter and do the utmost to regain (public) confidence,” Aso said, once again signaling he has no intention to resign.


Some analysts, however, say Aso’s resignation could be inevitable. While he blamed bureaucrats on Monday for the suspected cover-up, opposition lawmakers are calling for the minister to step down to take responsibility.

A poll by the Sankei daily showed 71 percent of respondents said Aso should resign, while support for Abe’s administration slid 6.0 points from February to 45 percent.

“Aso said he would not … resign to take responsibility for the cover-up. But this approach is unlikely to work for long,” said Harris of Teneo Intelligence.

The suspicion of a cover-up has rocked Abe’s Liberal Democratic Party government and could dash his hopes to win a third term as leader at a vote in September – which would have put him on track to become Japan’s longest-serving premier.

News of the scandal is also weighing on markets. Japan’s Nikkei share average Nikkei, which trimmed early gains on Monday as the suspected cronyism scandal dampened sentiment, slid 0.8 percent in early trade on Tuesday.

The dollar was down 0.15 percent at 106.28 yen as the political scandal put the future of Abe’s economic policies in doubt and pushed it off last week’s high of 107.00. The yen tends to strengthen at times of economic or political crisis.

The parliamentary stalemate could also leave two Bank of Japan deputy governor posts vacant when the incumbents’ terms end on March 19.

The government’s nominations for BOJ deputy governors need to be approved by a vote in both houses of parliament to take effect.

(Reporting by Leika Kihara and Tetsushi Kajimoto; Editing by James Dalgleish and Eric Meijer)

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