Japan's Prime Minister-elect Yukio Hatoyama said on Saturday he had picked Naoto Kan, a former health minister, to head a powerful new agency that will oversee the budget process and set policy priorities.
Prime minister-elect Yukio Hatoyama, who will take office on Sept. 16 following his Democratic Party's huge election win last Sunday, is also leaning toward picking Katsuya Okada as foreign minister, the papers said.
Both Kan and Okada are former leaders of the Democrats and had been tipped as potential finance ministers.
The Nikkei business daily reported Hirohisa Fujii, a former finance minister, is likely to be picked for that post.
The Democrats come to power with ambitious spending plans to put more money in the hands of consumers, raising concerns they will inflate a public debt already about 170 percent of GDP, the highest among advanced countries.
Fujii, 77, is the head of the Democratic Party's tax panel, and he has called for funding Japan's social welfare costs with consumption tax revenue and discussing over the next four years the issue of raising the sales tax.
He said Tokyo should not step into currency markets unless exchange rates move abnormally, adding that a strong yen is good for Japan.
Nikkei also said Masayuki Naoshima, the DPJ's policy chief, was likely to hold one of economic cabinet posts.
Hatoyama's choice for the top diplomatic portfolio is being closely watched over expectations to adopt a more independent stance from the United States.
The Mainichi daily newspaper said Hatoyama picked Okada for his connections in the United States.
The new National Strategy Bureau, to include both public and private sector officials, will be tasked with reforming what the Democrats have said is a cumbersome policy-making system.
The new strategy bureau will seek to implement a Democrats' promise to bring elite bureaucrats to heel and put politicians back at the centre of policymaking.