3RD LD: Gov't to present candidate for next BOJ governor Fri.: Machimura

(EDS: RECASTING WITH MORE INFO)

The government will present its candidate for the next Bank of Japan governor to the Diet on Friday, Chief Cabinet Secretary Nobutaka Machimura said Thursday as political wrangling snarled the selection of the successor to incumbent Toshihiko Fukui, whose five-year term ends March 19.

The government ''will present the names of the best possible candidates. We strongly hope that (the opposition camp) will accept our candidates,'' Machimura said at a news conference, adding that the government will also propose nominees for two deputy governors for the central bank.

Machimura indicated the government does not oppose the idea of a former top finance ministry official assuming the governorship of the central bank, citing similar examples in Europe and the United States where former vice ministers or other senior officials at finance ministries have become chiefs of central banks.

The government is expected to nominate BOJ Deputy Governor Toshiro Muto, a former vice finance minister, for the next BOJ chief. Muto and Kazumasa Iwata, another BOJ deputy governor, will complete their five-year terms on March 19.

''It is very important to ensure independency of monetary policy,'' Machimura, the top government spokesman, said. ''I think it's important that a person who has such views will be selected'' to BOJ governor.

A House of Councillors' Budget Committee meeting was called off Thursday for the third consecutive day as the Democratic Party of Japan and two smaller opposition parties continued to refuse Diet deliberations on the state budget and a tax reform bill for fiscal 2008.

The opposition parties are stepping up their resistance after the House of Representatives passed the budget and the tax reform bill on the strength of the ruling parties' majority in the chamber, a move that threatens a government plan to nominate Muto for the post of central bank governor.

The opposition camp, which controls the upper house, said there had been insufficient deliberation on the issues, arguing that they had lost confidence in the Liberal Democratic Party and its coalition partner the New Komeito party.

Some DPJ lawmakers oppose selecting Muto for the head of the BOJ, saying that appointing a former senior Finance Ministry official to run the central bank would hurt its independence in steering monetary policy.

Prime Minister Yasuo Fukuda said Wednesday the BOJ governorship ''can never be vacant,'' mirroring growing concern in political and business circles that a leadership vacuum at the central bank could hurt its credibility in the midst of global financial market turmoil sparked by the U.S. subprime mortgage crisis.

The appointment of the BOJ chief requires Diet approval. The opposition parties can block the government's nomination in the upper house, even if approval is secured by the ruling bloc in the more powerful lower house.

Diet deliberations on personnel requiring parliamentary approval usually take around 10 days under normal circumstances, according to the secretariat of the House of Representatives.