WASHINGTON – Top White House economic adviser Lawrence Lindsey urged Japan on Wednesday to improve its use of fiscal revenues in carrying out structural reforms.
Lindsey made the request during a meeting with the secretaries general of Japan’s three ruling parties — Taku Yamasaki of the Liberal Democratic Party, Tetsuzo Fuyushiba of New Komeito and Takeshi Noda of the New Conservative Party.
Lindsey maintained that Japan should focus the use of government funds on quality, not quantity, in order to promote structural reform, the three told a news conference.
Structural reform will be retarded if the money is used to rescue firms that should go bankrupt, Lindsey was quoted as saying.
He reportedly pressed Japan to ease its credit grip further, saying the Bank of Japan should act to prevent the economy from plunging into a deflationary spiral. He did not elaborate further on the monetary issue.
Lindsey also said one pressing issue facing the government of Prime Minister Junichiro Koizumi is reducing the excessive debt in the corporate and financial sectors.
The coalition executives said they explained that the ruling bloc presented bills to the Diet earlier this month to achieve that goal.
Earlier in the day, the trio met with Treasury Secretary Paul O’Neill and pledged that Japan will carry out drastic economic reforms while keeping the economy growing.
“I told Mr. O’Neill that the coalition government places high priority on disposing of bad loans in the banking sector, and this may curb economic growth temporarily,” Yamasaki told reporters after the meeting. “But I explained to him that the government will try to ensure that the economy will not plunge into negative growth.”
O’Neill told the visitors that he was impressed by Koizumi’s strong leadership on structural reform and Washington hopes his government will deliver the reforms as promised, according to Yamasaki.
On the U.S. economy, Lindsey was quoted as saying Washington hopes to achieve real economic growth of 3 percent on an annual basis by the end of this year or early next year.
The U.S. gross domestic product grew an annualized 1.3 percent in the first quarter of this year — much slower than the roughly 5 percent in the first half of 2000.
The three men arrived in Washington earlier Wednesday on a three-day trip for talks with senior U.S. economic officials.
They will meet with Glenn Hubbard, chairman of the White House Council of Economic Advisers, and Federal Reserve Chairman Alan Greenspan on Thursday.
The trip is the first visit to the United States for the top party executives of the LDP-led coalition since Koizumi came to power in April.
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