Press Release No. 04/121

Press Release: IMF Managing Director Rodrigo de Rato's Statement at the Conclusion of His Visit to Japan

June 22, 2004

International Monetary Fund (IMF) Managing Director Rodrigo de Rato made the following statement in Tokyo today:

"Japan is a key pillar of the global economy, and it is a great pleasure to visit Tokyo for the first time as Managing Director of the International Monetary Fund. During this visit, I have had the privilege of meeting with Prime Minister Junichiro Koizumi. I also had fruitful meetings with Finance Minister Sadakazu Tanigaki, and Bank of Japan Deputy Governor Toshiro Muto.

"I am optimistic about Japan's prospects, as both recent developments and my discussions indicate that Japan's longtime economic problems are clearly easing. The recovery has picked up pace and is broadening, and deflationary pressures are lessening. Labor market conditions are starting to improve as well. While there are risks to the outlook arising mainly from external factors, there is a good prospect that expansion will continue at a reasonably strong pace in the near term.

"This improved situation partly reflects a strong global economy, but it also owes much to steady policy efforts at home. Thanks to such efforts, major banks have made good progress in reducing bad loans while an increasing number of corporations have restructured their finances and operations. Meanwhile, monetary policy is providing appropriate support to the economy.

"Looking forward, important challenges remain, and reforms, including to stabilize the public debt and further strengthen the financial system, will be needed to ensure a strong and durable expansion. The current more favorable economic situation provides a good environment for moving forward. My discussions with the authorities made clear their determination to take the necessary steps, not just by tackling remaining corporate and financial sector weaknesses and deflation, but also by undertaking medium-term fiscal consolidation and wide-ranging structural reforms to boost Japan's economic potential. I am confident that the authorities' efforts will lay the basis for a strong and durable expansion that will yield substantial benefits both for Japan and the global economy.

"Indeed, the outlook has brightened outside Japan as well. A solid global recovery is underway, including in the United States and the Asian region. Risks remain on the horizon, especially a sustained rise in oil prices. Nonetheless, prospects are for a continued recovery, and these improved global prospects provide a favorable environment for countries to undertake reforms that will help sustain the global expansion going forward. Also, in my discussions with the authorities we agreed on the importance of successfully completing the Doha trade round for the continued strength of the global economy.

"During our meetings, I had the opportunity to hear the views of Japanese officials on how the Fund can play a more effective role in the region. I also listened to views on how Asia's voice can be better heard in the Fund. The Fund's role and the issue of voice are key matters for all of us, and I look forward to further discussion of these issues in the period ahead."