Japan’s Kishida Seeks to Minimize Fallout as Minister Steps Down

(Bloomberg) -- Japanese Prime Minister Fumio Kishida tried to repair political damage after his economy minister stepped down over ties to a fringe religion, pledging to press ahead with an economic stimulus package that contains help for households.

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“I believe we can draw up the plans by the end of the month, as scheduled,” Kishida told reporters Tuesday after accepting the resignation of economy minister Daishiro Yamagiwa the previous day. Former Health Minister Shigeyuki Goto will take over the post, Kishida said.

The package will be key to Kishida’s fate. He is seeking to alleviate the effects of the highest inflation in decades on Japan’s residents, while endorsing the Bank of Japan’s continued ultra-easy monetary policy, which has weakened the yen to a 32-year low and contributed to price rises.

Revelations about the extent of the ruling Liberal Democratic Party’s connections with the Unification Church, which has a long list of court rulings against it in Japan over its fundraising methods, have sent the prime minister’s support plummeting to its lowest levels since he took office just over a year ago.

Outgoing economy minister Yamagiwa has been grilled in parliament for days over his ties to the group, becoming a liability for the prime minister. More than 70% of respondents to a Mainichi newspaper survey carried out from Oct. 22-23 had called for Yamagiwa to resign. Yet replacing him is unlikely to resolve the issue for Kishida.

While he need not face an election for more than two years, Kishida’s unpopularity weakens his control over the party and hampers policies he’s pledged such as a hike in defense spending for which he needs to find funding.

Koji Nakakita, a professor of social sciences at Hitotsubashi University in Tokyo, said he didn’t envision any effect from Yamagiwa’s resignation on the government’s economic stimulus package.

“They can maintain continuity,” he said. “I don’t think there will be any change in economic policy.”

Among the policies expected in the package is what Kishida has called “unprecedented” help for households and businesses facing soaring electricity and gas bills. The total size of the package is expected to be about 26 trillion yen ($175 billion), Kyodo News reported Monday, citing LDP Secretary-General Toshimitsu Motegi.

“Just because Yamagiwa’s resigned, it doesn’t mean this is over,” said Nakakita, who said the opposition parties were likely to continue to pursue the issue. “I don’t think Kishida will resign right away. His support has faded, he’s lost political capital and it will be difficult for him to exercise leadership.”

--With assistance from Takashi Hirokawa and Lily Nonomiya.

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