Opening Remarks at the Eighth Tokyo Fiscal Forum

IMF News, June 6, 2023

Source details

Speaker: Mr. Kenji Okamura, Deputy Managing Director, IMF
Date: June 6, 2023
Event: Eighth Tokyo Fiscal Forum — first in-person forum since 2019
Co-organizers acknowledged: Japan’s Ministry of Finance and the Asian Development Bank Institute
Purpose of in-person format: strengthen relationships and build social networks

Two main themes:
- The Relevance of the Fiscal-Monetary Policy Mix for Disinflation
- Global Cooperation and Climate Change

Context:
- Inflation upsurge since 2021 required immediate tightening of monetary policy.
- Fiscal policy can support monetary policy in disinflation efforts.
Empirical finding from the IMF’s Fiscal Monitor:
- "one percentage point of GDP in additional public spending resulted in higher inflation of 0.5 percentage point from 1986–2019."
Policy implications and priorities:
- Fiscal consolidation sends a powerful signal that macro-economic policies are aligned in the fight against inflation.
- Need to protect those most affected by the cost-of-living crisis while operating within tighter budgets.
- Fiscal authorities should prioritize policies to manage constrained fiscal space.
Forum focus:
- Explore better coordination between fiscal and monetary policy from a macro-fiscal perspective.
- Discuss how to manage fiscal policy under difficult fiscal and inflationary conditions.

Time horizon:
- Transition to "net zero" greenhouse-gas emissions over the next three decades.
Policy design elements:
- Carbon pricing identified as the ideal centerpiece.
- Carbon pricing may need reinforcing with sectoral measures such as feebates and regulations.
- Public infrastructure investments and transition measures should be well designed to enhance economic and social resilience.
Capacity development and analytical tools:
- IMF Fiscal Affairs Department work includes Climate-Public Investment Management Assessment (C-PIMA), green Public Financial Management (PFM), capacity development on climate mitigation policies, and comprehensive climate fiscal diagnostics.
Climate finance:
- Scaling up climate finance requires the right policy incentives to encourage financing flows from both the public and private sectors.
Forum program note:
- Climate policy and global cooperation on this topic will be discussed on Day 2.

IMF commitments:
- Stand ready to help members strengthen public finance through policy advice and institution building.
- Provide substantive capacity development to help countries address fiscal and climate challenges.
- Emphasis on listening to member needs and tailoring support.
Closing remarks:
- Hope that the forum fosters experience-sharing and development of fiscal policy solutions for member countries.
- Wishes for a fruitful debate over the next two days and thanks for active participation.

Source: Opening Remarks at the Eighth Tokyo Fiscal Forum, Mr. Kenji Okamura, Deputy Managing Director, IMF, June 6, 2023.