Japan's ruling Democratic Party has just elected former Finance Minister Naoto Kan as its new leader, paving the way for him to become the next prime minister.

Kan will almost certainly be installed as PM later Friday because the Democratic Party of Japan controls a majority in the more powerful lower house of parliament.

Naoto Kan is known as a straight-talker who calls it as he sees it. He's famous for battling powerful bureaucrats.

Kan will have a tough job ahead. He'll be in charge of the world's second-largest economy burdened with masive public debt, a sluggish economy and an aging, shrinking population.

Naoto Kan, Japan's Finance Minister, said, "I have no doubt the Japanese economy will recover. It is true it is tough to return the fiscal condition to a healthy status and I'm not saying we can do it quickly. But, at least I think I can make a correction to the situation where our debt expands limitlessly like now."

Because the ruling Democratic Party of Japan controls a majority in the more powerful lower house of parliament, the new party chief will almost certainly become prime minister.

The next leader will face the tough job of trying to revive voter confidence in the party ahead of upper house elections expected in July.

Professor Phil Deans, International Relations, Temple University, said, "This revolving door of prime ministers is extremely damaging for Japan internationally. It's very hard for Japan's neighbours to develop the personal relationships, which are important with Japanese politicians when the prime minister and the cabinet keeps changing."(4012)

The parliament's two chambers will vote Friday afternoon to install the new prime minister. His new Cabinet could be named as early as late Friday.

The Tokyo stock market had risen on expectations of Kan's appointment.

The Nikkei average edged up 0.3 percent on Friday.