Speech

Japan and the IMF: A Partnership for Resilience

July 19, 2022

As prepared for delivery

Introduction: The Importance of Resilience

Minister Suzuki , Vice Minister Kanda, Honored Guests, Ladies and Gentlemen—Good morning. Ohayo gozaimasu. Thank you, Chikahisa, for the warm introduction.

Let me first express my deepest condolences on the Japanese people’s tragic loss. Abe Shinzo’s accomplishments in his incredible life of service are far too great to list here, but one statistic stands out for me—he traveled to 176 countries.

His commitment to multilateralism—to a global Japan that could rally the world to meet great challenges—was simply unparalleled. And on a personal note, I was so honored to be received by him in the Kantei during my last visit. He was a warm and engaging host, and a tremendous supporter of the Fund.

Your loss is the world’s loss. The people of the IMF mourn with you.

And we honor Prime Minister Abe’s legacy by continuing to advance global cooperation, through the work Japan and the Fund do together around the world—so much of that work is done through the IMF Regional Office for Asia and the Pacific—OAP.

Thank you, OAP team, for organizing this event. And congratulations on your 25th anniversary. I am so honored to celebrate it with you!

This anniversary represents twenty-five years of partnership: between Japan and the IMF, and between the IMF and its member countries in the Asia-Pacific region. It reflects our capacity to learn and adapt, cooperate, and evolve for the good of this region and its people. And it signifies our deep determination to learn from the lessons of the past—and build a more resilient future, together.

We gather today in a world that isincreasingly prone to shocks—a world that is facing multiple crises: the ongoing fallout from the pandemic, and the continuing war in Ukraine, with serious global economic consequences, including rising debt and inflation, and a growing risk of fragmentation into geoeconomic blocs. Amid these shocks, attention to building resilience has never been more important—or more urgent.

That is why it is so appropriate that I speak to you today in Japan: a country whose people have persevered through so many shocks over so many years—an inspiration to us all.

I will never forget the scenes of the Great East Japan Earthquake and how devastating it was for the people it harmed—nor the solidarity of the Japanese people and their exceptional ability to recover stronger.

I am reminded of a well-known Japanese symbol of resilience that was often highlighted during those difficult times: the daruma doll.

I learned recently that this symbol had its start among farmers who used the doll as a good luck charm for their harvests. But it also had another early application: to ward off outbreaks of the smallpox virus and help people recover from illness.

The daruma doll is a great symbol of the challenges we face today, and the resilience we need to build to face them.

A Strong Foundation

Above all, building resilience requires a strong foundation.

Whenever someone tries to knock over a daruma doll, it will tilt. But it always bounces back to its original position. This is the origin of a famous Japanese proverb about resilience: nana korobi, ya oki—or fall seven times, get up eight.

Why does the daruma doll do this? Because there is a firm weight in the base of the doll that helps it stay upright.

Just like the doll, economies are most likely to quickly get back up after facing a shock if they have a strong foundation—a base of sound economic policies and institutions.

We have seen this in Japan many times throughout its history. We saw it again over the past two years.

It was Japan’s strong policy actions—before and during the pandemic—that made it resilient and helped it recover. Japan had the fiscal and monetary space to undertake containment measures and other steps to tackle the pandemic. This left Japan, over the past two years, with lower rates of COVID-related infections and deaths than in most advanced economies.

Strong fiscal and monetary policy support, combined with easing of regulations to facilitate the supply of credit, have also contributed to the resilience of Japan’s banking system, which remains well-capitalized and liquid.

And Japan has worked to build strong foundations of economic resilience across the region, including through its support for OAP.

For instance, OAP has partnered with the Central Bank of Samoa to organize a conference on financial stability, and the Vietnamese authorities on a workshop on public investment management.

But as I have learned, the daruma dolls don’t just symbolize getting up after falling down.

A Vision for a Better Future

They also project the importance of shaping a vision for a better future.

When daruma dolls are created, there is one part that is left unpainted: the eyes. Why? Because it is up to you to paint it. It is up to you to give it vision. For this reason, daruma dolls represent setting a goal for the future—and seeing it through.

Long-term resilience requires the vision to pursue the bold transformations necessary to build a better future.

One example is the transition to a greener, low-carbon economy. Here, I would like to applaud Japan’s commitment to reduce net greenhouse gas emissions to zero by 2050. As in other countries, this will require a big policy push that includes investment in green technologies and some form of carbon pricing.

Economies can also benefit from digital transformation. Here in Japan, we have seen immense technological innovation and digitalization. For example, Japan already has one of the highest densities of industrial robots. Further raising the level of digitalization, investing in human capital, and elevating the role of women in the economy can help Japan increase its productivity—and better tackle challenges like climate change and an aging society.

In the region, OAP has stepped up to help countries build a better future in many ways. Its programs help countries develop and implement policies to achieve the Sustainable Development Goals, and address climate-related financial risks.

Cooperation to Build Resilience

Time and again, we have seen that working together with others can build resilience.

Expanding cooperation is like broadening the base of the daruma doll to make it even more stable. And in a time of multiple crises, we need all hands on deck.

Few countries have supported regional and global cooperation in so many concrete and powerful ways as Japan.

Japan has long been a key member of the Fund, and is the largest contributor to our financial resources, including to our concessional funding facilities to help the poorest countries.

And critically for so many countries and people, Japan has also been the largest contributor to IMF capacity development activities since 1990.

Its contributions have allowed us to help our member countries on a wide range of critical economic topics. Recent examples include support for initiatives on digital money and central bank digital currencies , and the IMF's COVID-19 Crisis Capacity Development Initiative.

We are especially grateful for Japan’s generous funding of the Japan-IMF Scholarship for Asia, or JISPA, and OAP here in Tokyo. JISPA alumni have taken leadership roles in their home countries, and it is a great pleasure that we have many of the current scholars with us room today.

They represent the future of Asia—we are very proud to support them.

The Next Twenty-Five Years

Let me conclude. I also understand that in the great tradition of the daruma dolls, you always make a wish—a goal you commit to achieve.

So, I leave you with this wish:

That in the next twenty-five years, we will build forward better—toward a world that is greener and smarter, fairer, and more equitable, and of course, more resilient.

And I also wish that OAP and the Fund will continue to play a vital role to achieve this better, more resilient world. With the incredible support of Japan, and the continuing partnership of our member countries, I have no doubt we can do it.

Thank you very much. Domo arigato gozaimasu.