HONOLULU – U.S. Treasury Secretary Paul O’Neill on Wednesday welcomed Prime Minister Junichiro Koizumi’s pledges to reform the economy and said Japan should pursue economic growth to help spur the slackening global economy.
“We welcome Prime Minister Koizumi’s recent statements indicating his commitment to reform and look forward to seeing Japan take the steps needed to trigger an enduring recovery,” O’Neill said in opening remarks to the 34th annual meeting of the Asian Development Bank.
Koizumi pledged Monday in his policy speech to the Diet to carry out sweeping economic structural reform and presented a two-step program that begins with limiting the issuance of new government bonds in the fiscal 2002 budget.
He also said he will make efforts to resolve Japan’s bad-loan problem in two to three years.
In a meeting with Finance Minister Masajuro Shiokawa in late April, O’Neill pressed Japan to speedily resolve the bad-loan problem.
The huge amount of nonperforming loans held by Japanese banks since the burst of the bubble economy in the early 1990s is seen as a critical impediment to Japan’s early economic recovery.
O’Neill told a news conference later in the day that he is interested in what Japan actually does to promote economic structural reform. He made the remark in response to a question that some economists have expressed concern that Koizumi’s reform efforts may be slow.
O’Neill also said in the speech, “A healthy global economy requires all of us to perform to our full potential, and, at the moment, all of the major economies are operating below their long-term potential.
“It is important for Japan, after 10 years of sluggish growth, to achieve strong, stable growth,” he said, after noting Japan has a real growth potential of 3 percent.
O’Neill said that Japan fulfilling its growth potential is of particular importance to the overall Asian economy.
The head of the Japan Federation of Economic Organizations (Keidanren) has told Prime Minister Junichiro Koizumi that the industry group will back his plans to pursue administrative and fiscal reforms.
Keidanren Chairman Takashi Imai also handed Koizumi a package of requests Wednesday for government measures to help companies enhance their management, the official said.
Imai asked Koizumi to draw up concrete plans, emphasizing the need to “show the future situation to the people of Japan, as the reforms will not come without pain,” the official said.
Koizumi reiterated that he intends to seek public support by focusing on cutting government spending instead of relying on hasty tax increases.
“There is a lot of waste in administrative organs, so we can’t win public understanding even over an increase in the consumption tax without pursuing thorough cutbacks in expenditures,” Koizumi said.
Imai also told Koizumi that Keidanren fully supports his inaugural policy speech Monday in the Diet, saying it incorporated “all that Keidanren wants to request.”
Koizumi welcomed Keidanren’s plan to send a mission to Russia later this month, saying he hopes it will lead to deepening understanding between the two nations in economic and cultural fields.
Koizumi said the government plans to hold a “Japan festival” in Moscow next year.
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