Speech

Opening Remarks by Deputy Managing Director Okamura at IMF-JICA Conference

February 13, 2023

As Prepared for Delivery

Honorable Ministers and Governors, President Tanaka, Vice Minister Kanda, and Ladies and Gentlemen:

A very good morning to you all, and welcome to the Sixth IMF-JICA Conference. I am pleased to be together again in Tokyo after a long break.

To begin, I would like to extend the IMF’s great appreciation to JICA and to the Japanese authorities. Thank you for your generous support to make this conference possible. Thanks also to JICA and IMF staff for their hard work putting this conference together.

We last convened in February 2020, just before the outbreak of the COVID-19 pandemic. Three years later, the global community has faced myriad challenges. These include shocks from the pandemic, Russia’s war in Ukraine, and inflation, which is driving a cost-of-living crisis.

2022 was a very difficult year for the world economy, and it seems 2023 will be tough as well. But the outlook is less gloomy than our forecast last October: we expect this to be the year global growth bottoms out.

In our most recent World Economic Outlook, we expect global growth to fall from an estimated 3.4 percent in 2022 to 2.9 percent in 2023, then pick up next year.

Asia, however, is a bright spot. We expect regional growth to accelerate this year, driven by China’s reopening. But the world and the region face significant downside risks:

China’s re-opening could stall. Inflation could remain higher than expected. Russia’s war in Ukraine could escalate. And geo-economic fragmentation threatens multilateral cooperation, just when we need it most—especially on pressing global issues like debt and climate change.

We also face new fiscal challenges amid high public debt and limited budgetary space. Expanded social spending was essential to help vulnerable families through the pandemic. But it must now become sustainable.

The good news is, fiscal policymakers are working to address these challenges. Here are two areas where they can continue to make progress:

- First, we can reorient fiscal expenditures and budget formulation to tackle structural challenges like climate change and digital transformation. This would help mitigate the effects of scarring from the pandemic and achieve the sustainable development goals.

- Second, we can ensure that fiscal policies and budget frameworks are consistent with longer-term fiscal sustainability, enabling governments to protect vulnerable people and our climate, while making much-needed long-term investments.

I hope today’s sessions will foster further international cooperation on these important issues—both in our region and beyond—and identify best fiscal strategies that will help jump-start inclusive and sustainable growth.

Three years ago, the world came together when the pandemic hit. Today, we must renew that spirit of cooperation to find a path forward.

Thank you in advance for what I know will be a productive set of discussions.