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New IMF Chief Praises Japan's Reform Efforts - 2004-06-25

Japan's economic reforms are winning praise from the head of the International Monetary Fund, as the country's election campaign kicks off. The Japanese are talking about resuming U.S. beef imports. And there are leadership and stockholder changes at the Japan unit of cell phone provider Vodafone.

Just as an election season kicks off in Japan, Prime Minister Junichiro Koizumi's reform efforts are winning praise from an influential outsider.

The new managing director of the International Monetary Fund, Rodrigo de Rato, says Japan's reform efforts have paid off, with the country's economic recovery picking up pace. But he says Japan's fiscal policy still needs to focus on the problem of deflation.

"We think that it is not contradictory that we believe that monetary policy in Japan should continue being oriented toward rooting out completely deflationary pressures, and, at the same time, that budgetary policies should start taking measures to reduce the level of debt," he said.

Japan's trade surplus surged more than 35 percent in May compared to a year ago. The Finance Ministry, in releasing preliminary figures, says that marks an 11th straight month of gains.

Analysts say the $9 billion surplus can be attributed to robust exports, especially to Asian countries where demands for cell phone microchips are strong.

As far as items coming into Japan, the ministry says there was a huge rise in imports of coal used to make steel, which is then being exported to China. Also notable is the demand in Japan for frozen pork to replace U.S. beef, which was banned after a case of Mad Cow Disease in the United States last December.

Japanese officials say three days of working-level talks involving experts and government officials from Tokyo and Washington concerning the beef trade and mad cow disease will be held next week in the U.S. state of Colorado.

They say they are hoping this will pave the way for high-level talks next month, which could set conditions for the resumption of U.S. beef imports.

West Japan Railway is selling all its shares in cell phone service provider Vodafone. The transaction is expected to net the railway more than $200 million.

At the same time, the head of Vodafone's Japan operation has unexpectedly resigned. Daryl Green, who had been at the helm for 2.5 years, is departing for personal reasons after the Japan unit reported a 20 percent decline in operating profits for 2003.

Here in Japan, British-based Vodafone lags behind competitors NTT DoCoMo and KDDI. DoCoMo plans to introduce a new mobile electronic wallet in the coming months, while KDDI is rapidly adding subscribers with competitive pricing plans.