Tuesday, October 29, 2013
DJ: IMF Asia Head Says Japan's Growth Friendly Fiscal Reform Will Be Key
TOKYO -- The International Monetary Fund on Tuesday urged Japan's economic policy makers and fiscal authorities to work together to find a right policy balance that would achieve both economic growth and fiscal consolidation.
"Given Japan's extremely high public debt-to-GDP ratio, fiscal consolidation is necessary," even though it could pose risks to a necessary transition to private demand-led growth, Anoop Singh, director of the IMF's Asia and Pacific Department, said at a seminar in Tokyo. "Finding the right balance also by making fiscal reform as growth friendly as possible will be key."
The message was apparently aimed at encouraging Japan to tackle its massive public debt even while the nation, under the leadership of Prime Minister Shinzo Abe, aggressively pursues economic policies aimed at spurring economic growth.
Mr. Abe's government and the Ministry of Finance have repeatedly clashed in the past year, as Mr. Abe tries to circumvent the ministry's goal of achieving a more balanced budget.
As Mr. Abe's government has begun undertaking structural reforms of the economy by dismantling various regulatory red tape, Mr. Singh posed a question: "which growth enhancing structural reforms should be prioritized?"
Japan has put forward various reform ideas, including labor market reform, deregulation in key sectors, and encouraging female labor participation. Mr. Singh indicated, however, that Mr. Abe should prioritize these policy measures in order to achieve results early.