Steering the fiscal ship of a nation is no easy task at the best of times – and we are most definitely not living in the best of times.
Then throw into the mix the fact that a significant number of Asian countries are heading into elections later this year, and our annual survey of the region’s finance ministers has not been easy.
At FinanceAsia, however, we are nothing if not diligent, so a team of our reporters set about the task of interviewing experts and sources in each market to deliver a meaningful rankings list of finance chiefs.
Our focus is on the region’s 12-largest economies and our purpose is to provide support to the most progressive ministers and to pressure those who could do better for their populaces.
Depending on the country they serve, a finance minister’s responsibilities and powers vary. As a general rule, however, they can be judged on their handling of the nation’s finances, their contribution to its fiscal policy, the development of its capital markets and the regulation of its financial institutions.
And to produce meaningful rankings, it is necessary to take into account the level of independence afforded to each minister, their political deftness to get things done, their ability to retain public trust as well as the degree to which they have delivered on their brief.
We penalised finance ministers when they, through their actions or speeches, detracted from the credibility and prestige of the institutions they represent.
Sadly, most of the ministers we reviewed looked worse over time, led by Japan's Taro Aso, take a bow.
But those men and women near the top of our list impressed our judges through their commitment to change. We will be releasing the results in reverse order, day by day, over the next few weeks ... starting with the man at the bottom of our list.
When it comes to fiscal discipline, Japan is the bad boy among nations. Japan carries the world's largest sovereign debt burden at over twice the size of the economy, which it will struggle to uphold given its rapidly ageing population and sluggish economic growth.
Despite that, the country’s Ministry of Finance drew up a ¥101.5 trillion ($925 billion) annual budget draft for the fiscal year starting in April, a record high for the seventh straight year.
In June, the government formally postponed its target for achieving a primary surplus by five years to 2025. “Even the revised target date appears ambitious, as it is based on optimistic growth assumptions,” said Stephen Schwartz, a credit analyst at ratings agency Fitch.
The IMF’s managing director Christine Lagarde has warned Japan’s minister of finance, Taro Aso, that hiking a nationwide sales tax hike to 10% from 8% is vital to help pay for rising welfare costs. This hike has twice been delayed since 2015 but is finally scheduled to go ahead in October. And yet Aso’s budget plan features roughly ¥2 trillion of spending to soften the pain, so not exactly the point.
Aso, who ranked 11th out of 12 in our Finance Minister of the Year study last year, is no political neophyte. He was himself previously prime minister and has a large stock of political capital.
Aso still hasn’t taken responsibility for his ministry's tampering with documents related to a heavily discounted sale of state-owned land to school operator Moritomo Gakuen, once tied to Prime Minister Shinzō Abe’s wife, Akie. Abe has denied any wrongdoing by himself or his wife while Aso has rebuffed accusations of orchestrating any cover-up and repeated calls for his resignation.
In March, public broadcaster NHK said a Japanese government official who committed suicide left a note saying he thought he would be forced to take sole responsibility for forgery related to the government land sale. In Japan there is a custom known as "sontaku", which loosely translates as "following unspoken orders".
To be fair, Aso can’t be held accountable for the labour ministry’s miscalculation of wage data for years. The blunder, even so, casts doubt over the existence of a modest pick-up in nominal wage growth, which the government had hailed as a sign that the policies under the government's reflation initiative known as Abenomics were working. The mistake led to Aso saying in January that the proposed budget for the fiscal year starting April 1 will have to be revised to pay for shortfalls in workers’ benefits.
Aso can, however, be held accountable for his clumsy response to a #MeToo incident at the ministry.
A senior finance ministry bureaucrat sexually harassed female reporters, according to a weekly magazine. Administrative vice finance minister Junichi Fukuda denied the claim but the ministry acknowledged he had sexually harassed a journalist and docked his pay by 20% for six months. Aso, 78, said Fukuda may have been “framed”.
Another minister openly criticised him for being out of date. "Minister Aso is not a bad person, but he is from a generation that was not educated about sexual harassment and unlike our generation, he didn't need to be very aware of sexual harassment," said the internal affairs minister, Seiko Noda.
We acknowledge that Aso’s departure would cause factional instability within the incumbent Liberal Democratic Party as he is also Abe’s deputy prime minister and a staunch ally since Abe came to power in 2012. But he is fast becoming a political liability.
While some would give him points for being a political survivor, as we said last year, it's time for Aso to fall on his sword.