WASHINGTON – Japan will continue to pursue structural reforms to ensure sustainable growth, Finance Minister Sadakazu Tanigaki said Saturday at a policy meeting of the International Monetary Fund.
In a speech delivered to the International Monetary and Financial Committee, Tanigaki said the Japanese government “intends to pursue and accelerate its structural reform efforts” to convert signs of recovery into sustainable growth.
Tanigaki also said the government will step up efforts on fiscal reform to turn around debt-ridden state finances.
“Structural reform of the fiscal sector remains as the top priority policy issue, in view of the severe fiscal situation, with the highest gross government debt to gross domestic product ratio among the major advanced economies,” he said.
He said Japan will promote reforms in areas such as social security and taxation “with a view to achieving a surplus in the primary balance of the central government and local governments in the early 2010s.”
Primary balance is the balance between outlays and tax revenues without taking debt-servicing costs into account.
Tanigaki painted a rosy picture of Japan, saying, “The economy remains in a recovery phase led mainly by domestic private demand, without any recourse to fiscal stimulus.”
A slowdown in growth in mid-2004 followed the high growth seen in the second half of 2003 as well as global adjustments in the information technology sector, Tanigaki said, adding that real GDP growth “has recently become positive once more.”
He also said Japan has succeeded in cutting the bad-loan ratio in the financial sector.
“The government has now completed its urgent policy agenda, as in responding to nonperforming loan problems, and has begun to place more emphasis on forward-looking measures, including efforts to create a ‘Financial Service Nation,’ which gives people ready access to various financial instruments and services,” he said.
Tanigaki also called on the IMF to give East Asian members stronger voting power to better reflect the weight of their economies.
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