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.