Following Matsukata's resignation in the aftermath of the election scandal precipitated by
Shinagawa Yajirō in 1892, Watanabe was appointed Minister of Finance under the 2nd
Itō Hirobumi administration. During his tenure, the government was in a budgetary deadlock, as the opposition parties demanded a large reduction in public spending, whereas the military was pushing for more warships. The impasse was only resolved through the personal intervention of
Emperor Meiji, and Watanabe was replaced as Finance Minister by Matsukata on 17 March 1896, but returned to the same post from 27 August to 18 September of the same year. Watanabe was involved in establishment of the Committee on the Monetary System that was charged with the analysis of the best monetary system for Japan's economy in the long run. Watanabe also held the post of
Communications Minister in 1895 under the 2nd Itō administration and also served as Itō's vice premier. He was reappointed as Finance Minister under the 4th Itō administration in 1900–1901, despite having had a falling out with Itō earlier on the subject of political appointments. During his tenure, he attempted to impose an austerity budget, with implementation of a sugar tax and a liquor tax, and cutbacks in government enterprises. The measures passed the
lower house, but were blocked by the
upper house, resulting in another deadlocked
Diet of Japan which was resolved only through his resignation. ==Later years and death==