TOKYO (MNI) - The Japanese government is racing against the clock to draft budgets that help create jobs and cut emissions without hurting the fiscal balance too much, leaving little space for finding qualified, and willing, candidates to fill vacancies on the central bank board.

The Nov. 19-20 policy-setting meeting at the Bank of Japan will be the last one for board member Atsushi Mizuno, as his five-year term ends on Dec. 2.

But the Hatoyama administration has been busy doing ground work for drafting both a second supplementary budget for the current fiscal year and the budget for fiscal 2010, which together should support a fragile economic recovery. They will be sent to parliament early next year.

At the moment, the government is seeking parliamentary approval of some bills necessary to implement its campaign promises before the current 36-day extraordinary Diet session ends on Nov. 30.

This means that Mizuno's replacement is unlikely to be nominated anytime soon, and thus the usual nine-member board will have two vacancies again after he leaves.

If the Democratic Party government follows past practice, Mizuno's replacement will be picked from among private-sector economists and strategists. The BOJ already has a vacancy left by the promotion in March 2008 of board member Kiyohiko Nishimura to one of the two deputy governor positions at the bank.

"We don't see it as a low priority issue and any vacancies should be filled sooner than later, but it's not as if you could draw any picture on a white canvas as you wish," an official at the Democratic Party of Japan said on Wednesday.

"First we have to select the right people, who would not just listen to what BOJ staff tell them. But the qualified people may already have committed to their current work and cannot quit. In reality, it's not so easy, but I'm sure the Prime Minister's Office has been working on it."

The DPJ official familiar with Diet business said the government hasn't submitted to parliament any nominees for the two vacancies on the BOJ board, reminding that such nominations have to be made 10 days before the government seeks parliamentary approval of them.

"There may be a move tomorrow (Thursday), but unless nominations are presented to parliament by the end of the week, it's going to be very difficult to get this done," he said.

There haven't been any leaks to local news media as to which candidates the government may be considering.

As for the term of the BOJ board member position left open by Nishimura's promotion, whoever takes over, possibly with an academic background like Nishimura (he was an economics professor), will only serve for the remainder of the five-year term, which ends on April 7, 2010.

"Judging from the short remaining term, nobody seems to want to give up their current job and join the board unless the government reassures them that they will be re-appointed for another term in April," said a person close to the BOJ.

The person added that the position may not be filled before April and it also remains uncertain whether the government can find the right person after that.

In the past Ministry of Finance officials charged with hunting for nominees for the BOJ board have been rejected by many in the private sector partly because their salaries were higher than those for board members and partly because monetary policy-making is a specialized area of work.

Asked if the vacancies on the BOJ board would cause any problems for the bank's ability to guide the economy, the DPJ official replied: "It has been run without a hitch under the current leadership, and it was still all right even when they lacked one of the two deputy governors."

Things were more serious about two years ago, when the DPJ was still in the opposition camp.

The DPJ has been opposed to former MOF officials taking up jobs at the BOJ, with the party demanding the separation of fiscal from monetary policies. It has also been adamant that the appointment of a former senior Finance Ministry official would undermine the BOJ's independence.

In the House of Councillors, the then DPJ-led opposition camp voted repeatedly against any candidates for the governor's or deputy's post who were former Ministry of Finance officials, including an economist who only had a temporary job at the MOF for a few years.

When Toshihiko Fukui retired at the end of his five-year term as BOJ governor in March 2008, his deputy Toshiro Muto, the top candidate to succeed him, didn't get the job because he was formerly a vice finance minister and even though he had served at the bank for five years.

Career central banker Masaaki Shirakawa was hurriedly called back from academia and was made one of the two BOJ deputy governors. The new BOJ leadership had to start without an appointed head until Shirakawa was quickly promoted to the top position in April 2008.

Six months later Hirohide Yamaguchi was promoted to deputy governor from executive director to fill one of the two vacancies.

"The DPJ government may be waiting till things calm down after causing such confusion," said a former BOJ official who was directly involved in policy-making.

Article 23 of the BOJ Law says: "The members of the policy board shall be appointed by the cabinet, subject to the consent of the House of Representatives and the House of Councillors, from among persons with relevant knowledge and experience, including experts on the economy or finance."

The government sees appointments of BOJ governor and deputy governors as crucial issues but it does not appear to be so interested in appointments of the other board members, said a source close to the BOJ.

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