HORSHAM, England (Kyodo) Finance Minister Kaoru Yosano said Friday he told U.S. Treasury Secretary Timothy Geithner that Japan will use fiscal stimuli worth more than 2 percent of its gross domestic product — or about ¥10 trillion — to fight the global economic crisis.
After meeting Geithner ahead of a two-day gathering of Group of 20 financial leaders, Yosano said he and Geithner agreed to give top priority to pulling the global economy out of the crisis.
The International Monetary Fund has called on countries to introduce fiscal stimulus equivalent to 2 percent of each country’s aggregate GDP. It said last week that only the United States, Saudi Arabia, China, Spain and Australia are moving toward the target.
“I said the IMF’s 2 percent target Secretary Geithner referred to will be cleared, as Prime Minister (Taro) Aso yesterday instructed the ruling parties to consider additional measures,” Yosano said.
Pointing to the need for aggressive stimulus spending now, the two ministers also concurred that fiscal discipline should be honored in the medium term.
The G20 meeting that opened later comes as a rift between the United States and European nations widens over how to end the crisis. The former argues the G20 should adopt more fiscal stimuli, while the latter counters they are doing enough already.
“I also said that while I understand the need to tighten international financial regulations . . . what counts is we need to give top priority to escaping from the current economic and financial crisis,” Yosano said.
A Japanese official who briefed reporters on the bilateral meeting said Yosano and Geithner agreed countries should coordinate their macroeconomic policies to make up for demand shortages.
Yosano welcomed the U.S. decision to support Tokyo’s drive to boost the capital of the Asian Development Bank, adding he and Geithner agreed that for global recovery, it is essential to revitalize the economies of emerging and Asian economies.
During the bilateral talks, Geithner did not touch on his recent proposal to expand the IMF’s capacity to borrow extra funds from some of its member states by $500 billion, according to the Japanese official.
At present, the Washington-based lending institution is able to borrow about $50 billion through special supplementary financing arrangements.
Yosano was quoted as expressing concern about protectionism, saying the worst-case scenario would be the rise of protectionism as a result of the current crisis just as happened during the Great Depression in the 1930s.
It was the first encounter between Yosano and Geithner since Yosano took the finance portfolio last month after Shoichi Nakagawa’s resignation over his widely ridiculed performance at a press conference in Rome during which he appeared to be drunk.
G20 finance ministers and central bank governors assembled for a two-day meeting that started late Friday. The session will be a warmup for the G20 summit in the British capital April 2.
The G20 consists of the Group of Seven major industrialized countries — Britain, Canada, France, Germany, Italy, Japan and the United States — and emerging nations such as Brazil, China and India.
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