Financial authorities expressed disagreement April 14 with an International Monetary Fund economic outlook that put the nation’s growth at zero for this year.
The IMF’s semiannual World Economic Outlook released Monday saw its forecast for Japan slip downward from the 1.1 percent growth for 1998 it predicted in December.
The report says Japan will face continued decline in domestic demand, and business sentiment will be further dampened this year as a result of the ongoing strain in the financial sector and its effect on credit supply, as well as from the financial weakness elsewhere in Asia.
But Finance Minister Hikaru Matsunaga told a morning news conference that he found it hard to understand why the IMF believed the nation’s financial sector will be so unstable. “We took emergency measures (to stabilize banks), and all were able to clear necessary capital adequacy ratios, and we can expect their lending capabilities to rise from April onward,” Matsunaga said.
He added that if he has an opportunity to meet with IMF officials at Wednesday’s meeting in Washington of finance ministers and central bankers of the Group of Seven industrialized nations, he intends to explain that Tokyo has taken various steps to stabilize its financial industry.
At the same time, the finance chief said the government will continue efforts to encourage banks to lend, noting that many businesses were still complaining about stringent lending practices by financial institutions.
Matsunaga also said he hopes to brief U.S. officials Wednesday, including Treasury Secretary Robert Rubin, about the stimulus steps Prime Minister Ryutaro Hashimoto outlined last week, such as additional income tax cuts. “I am slightly worried that U.S. authorities might not have an accurate understanding of our taxation system, such as the fact that our income tax levels are low compared with other nations and that the bottom level of taxable income is higher,” he said.
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