For the second year running, FinanceAsia has ranked the finance ministers of the Asia-Pacific region’s 12 largest economies.
We're releasing the results day by day, from lowest to best. For the results so far, click here. For last year's results, click here.
FinanceAsia considers several factors when thinking about how to compare the performance of these men over the past 12 months. The role’s responsibilities and powers vary between countries but each minister contributes to fiscal policy and the budget, accesses capital markets, regulates financial institutions, and drives reform. Investor perceptions are one way to view how good a job they are doing, particularly when times are tough.
But the hardest criterion is independence. Most finance ministers serve at the pleasure of their prime ministers, presidents, or military dictators. Their ability to get things done requires political deftness, mastery of policy, sway over the bureaucracy, and the will to fight for the public interest.
Today's choice is a former prime minister and elder statesman facing up to problems that have dogged his country for years ... He is less hamstrung than most by having to bend his ideas to suit his prime minister as their political outlook is almost identical.
Ranked No10: Taro Aso, Japan
There is a lot to like in Taro Aso’s ¥96.72 trillion ($814 billion) fiscal 2016 proposed budget: the primary deficit is the lowest in nine years, social security spending growth has been held in check, and assumed tax revenues are at a 25-year high.
The Abenomics programme of reflationary policies is starting to kick in. Nominal GDP growth is now higher than the interest rate on 10-year Japanese government bonds.
However, all that is overshadowed by a Mount Fuji of public debt. At 246%, Japan’s gross government debt as a percentage of GDP is the highest in the world due to increased spending on pensions and healthcare for the country’s aging population.
The cost of servicing this debt eats up half of the state’s revenues. Other countries have done far more to restore fiscal soundness since the global financial crisis.
Three years into unprecedented stimulus the Bank of Japan’s 2% inflation target also remains elusive, partly because policymakers lack resolve to see through substantial structural reform.
As Prime Minister Shinzo Abe’s right hand man, Aso has promised to shepherd Japan through massive monetary easing and fiscal spending. On January 29 the Bank of Japan announced the latest salvo, a negative interest rate policy.
Aso has said that he shares almost identical political views to Abe. They are both part of the establishment; both their maternal grandfathers were prime minister.
Politically, Aso is a survivor. He held onto his post in a cabinet reshuffle. He has remained loyal to Abe, indicating that he would not run in the ruling Liberal Democratic Party’s presidential election.
But Japan’s famed social harmony breaks down when it comes to the all-out fight for resources – presided over by the ministry of finance, or Zaimu-sho.
Cigar-smoking Aso did put up a fight for his ministry at least once on a crucial issue: a hike in consumption tax to 10% from 8%. He did not want it delayed until April 2017 from October 2015 but was overruled by Abe on a flight back from a G-20 summit in Australia in November.
The planned hike has been chipped away still further and there is a ¥600 billion hole in the budget to provide a lower rate on food.
As a result the Cabinet Office forecast a bigger-than-expected primary deficit in fiscal 2020 – the government was targeting a primary surplus by then.
Aso, who doubles as deputy prime minister, has not been the most diplomatic of politicians on the international stage. At a recent summit Aso quipped that China’s Xi Jinping “sounded like he had his head in the clouds” rattling on about economic policy.
Overseas development aid will rise in the 2016 budget for the first time since 1999 – but we see this as laying the groundwork for a further unpicking of Japan’s pacifist constitution.
TOMORROW: A difficult end for an outgoing minister
