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Japan Rejects IMF Suggestion to Increase Spending - 2002-04-19

Senior Japanese government officials reject the International Monetary Fund's recommendation that Tokyo spend more to boost the economy. Japanese Finance Minister Masajuro Shiokawa says such a move would hurt efforts to limit ballooning public debt.

Mr. Shiokawa told reporters on Friday that the IMF's recommendations amount to meddling in Japan's domestic affairs.

In its semi-annual World Economic Outlook released on Thursday, the IMF said Japan should prepare an extra budget to stimulate its economy.

It also recommended that the Bank of Japan ease monetary policy more aggressively, even if that means a weakening yen. Japan's interest rates now stand nearly at zero, but the low rate has not encouraged bank lending.

Mr. Shiokawa and other top Japanese officials accused the IMF of giving an "out-of-focus" economic prescription.

Over the past decade, Tokyo has tried repeatedly, and failed, to stimulate growth with added spending.

As a result, Japan has been left with public debt that amounts to over 130 percent of the nation's gross domestic product.

Keeping public spending in check has been a pillar of Prime Minister Junichiro Koizumi's reform policy.

Mr. Shiokawa also berated international rating agencies, which recently downgraded Japan's long-term debt ratings.