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Navigating Uncertainty by Putting Your Fiscal House in Order
June 10, 2025
Good morning and welcome to the tenth Tokyo Fiscal Forum.
Let me first thank our co-hosts, Japan’s Ministry of Finance and the Asian Development Bank Institute for the excellent collaboration, and the Japanese government for its generous support.
At last year’s forum, I spoke about revenue collection and spending efficiency in the context of high public debt and low growth.
Since then, major policy shifts have occurred, and trade tensions have flared, leading to market turbulence and even to a brief period of turmoil in early April. Tensions have abated but policy uncertainty remains elevated.
This heightened uncertainty, together with tighter financial conditions, is weighing on growth prospects, amplifying debt risks in countries where debt levels are already high. In fact, our recently released Fiscal Monitor estimates public debt could increase by approximately 4.5 percent of GDP in the medium term because of a significant rise in uncertainty.
This is why our discussion today is focused on fiscal frameworks. In this rapidly changing environment, countries must prioritize putting their own fiscal house in order. This includes countries in the Asia-Pacific.
Public debt levels in the region, excluding China, are on average 20-26 percent of GDP higher relative to 2007. This will make it more difficult to manage the growing spending pressures from aging, development needs, and natural disasters.
Strengthening fiscal frameworks helps governments in the region tackle long-standing challenges and build fiscal buffers against uncertainties. For countries with high or rising debt, it would help reduce risks, while avoiding disruptive fiscal adjustments, ultimately improving long-term growth prospects.
I look forward to hearing more from our distinguished panel on this.
Tomorrow the forum will focus on GovTech, and how governments can harness the full potential of digitalization. The demand and development of digital products and services in Asia and the Pacific have accelerated quickly, outpacing most other regions. But more can be done to integrate emerging technologies, like AI, to improve the efficiency of public finances.
The panelists in tomorrow’s session will share their experiences applying some of the latest technologies.
On both these topics, the IMF is here to support you. In collaboration with the Asian Development Bank and World Bank, and through our Global Public Finance Partnership, we are ramping up our technical assistance. That said, this forum is an opportunity to hear from you. I welcome any suggestions you might have on how we can better tailor more of our advice to support your needs.
In these times of high uncertainty, fiscal policy can be an anchor for confidence and stability. Prudent policies, within a robust fiscal framework can deliver growth and prosperity for all.
Before concluding, I would like to thank Vitor for his leadership and contributions to this forum. This is the last time he’ll be participating as Director of the Fiscal Affairs Department, but his legacy as the founding father of the forum will live on.
With this, let me turn over to the conference organizers. I wish you a productive discussion over the next two days.
Thank you.
