Japan refuses to attend its own funeral...
Japan rejects IMF's grim outlook for economy
12:48 a.m. Apr 14, 1998 Eastern
By George Nishiyama
TOKYO, April 14 (Reuters) - Japan on Tuesday rejected the International
Monetary Fund's (IMF) grim outlook for its economy, saying that the
IMF's concerns were overblown.
''I find it difficult to understand the IMF's concerns over the
stability of the Japanese financial system,'' said Finance Minister
Hikaru Matsunaga, referring to the IMF's World Economic Outlook which
said weak banks were a factor behind expected zero growth for the
Japanese economy this year.
Matsunaga said stability had returned to Japan's financial system
following government measures to make use of up to 30 trillion yen ($230
billion) to stabilise the system, and efforts by commercial banks to
dispose of their problem loans.
Matsunaga also said the government would take measures to achieve its
forecast of 1.9 percent growth for the economy in the current fiscal
year which started in April.
''I hear that the IMF is forecasting zero growth, but we would like to
take measures so that we get closer to the government forecast,''
Matsunaga said.
The IMF forecast zero growth in Japan's economy this calendar year, but
said even that could be optimistic.
Signs of discord between the IMF and the world's second-largest economy
underscore differences which came to light at the London Group of Seven
(G7) nations' meeting in February and which were rekindled ahead of
another G7 meeting in Washington this week.
''If people from the IMF are there as observers, then I must explain to
them clearly that Japan's financial system has stabilised
considerably,'' Matsunaga said, referring to Wednesday's G7 meeting in
Washington.
At the London G7, the IMF stressed the need for Japan to take fiscal
steps, but Tokyo thought otherwise.
The IMF continued to put on the pressure, with its First Deputy Managing
Director Stanley Fischer saying last week that much of Japan's needed
fiscal expansion should be in the form of tax cuts.
Although Prime Minister Ryutaro Hashimoto heeded such advice and
announced four trillion yen of fresh income tax cuts last Friday,
Matsunaga said he will explain Hashimoto's ''bold decision'' to the
other G7 partners, indicating he would like to keep in check calls for
further tax cuts.
Matsunaga said he hoped to hold a bilateral meeting with U.S. Treasury
Secretary Robert Rubin and explain Japan's tax system, in particular
that the starting level for paying tax was very high in Japan, even
compared with the United States.
''I am a bit worried whether Rubin and (Deputy Treasury Secretary
Lawrence) Summers have a correct understanding of the Japanese tax
system,'' he said.
The IMF's bleak outlook comes on the heels of a grim forecast by the
Organisation for Economic Co-operation and Development (OECD) earlier
this month which said Japan was on the brink of recession, and forecast
a 0.3 percent fall in growth for calendar 1998.
($1-130 yen)
((Tokyo newsroom +81-3 3432-8022
tokyo.newsroom+reuters.com)) ^REUTERS@
Copyright 1998 Reuters Limited. |
