Japan urges IMF reforms to enhance tools to prevent crisis+

WASHINGTON, April 24 Kyodo -
Japan on Saturday called on the International Monetary Fund to implement a set
of structural reforms to reinforce its mission to prevent a future economic
crisis and boost its legitimacy as a key financial lender.
In a statement presented to the IMF's policy-steering International Monetary
and Financial Committee, Japanese Finance Minister Naoto Kan said that the IMF
should clearly set a target of ensuring financial stability as its post-crisis
mission.
The statement also said that the strengthening the IMF's surveillance functions
is ''a pressing issue'' as a pivotal tool for crisis prevention.
The IMF should be equipped with the necessary mandate to achieve these goals
while the obligations of member economies need to be reviewed so that ''the IMF
can appropriately implement multilateral surveillance, focusing on the
spillover effects of each country's macroeconomic policies and the situation of
financial systems on other countries,'' the statement said.
As for the IMF's lending role, Kan said that although some emerging economies
in Asia faced difficulties in the recent global financial crisis, they did not
apply for IMF support.
This indicates that ''there is a stigma'' attached to the Washington-based
lender among Asian economies over fears of ''the political cost of accessing
IMF lending programs,'' he said.
Kan asked the IMF to ''take a new approach'' to eliminate this stigma, while
urging the fund to explore ways to collaborate with regional financial
mechanisms such as the Chiang Mai Initiative, a network of bilateral currency
swap schemes in East Asia.
On the lender's quota system used for allotting voting power, the statement
reiterated Tokyo's position that quota shares should be shifted from
over-represented to under-represented countries to ''appropriately reflect the
current global economic reality.''
Last September in Pittsburgh, leaders of the Group of 20 advanced and emerging
economies agreed to redistribute at least 5 percent and 3 percent of voting
power in the IMF and the World Bank, respectively, to developing countries to
better reflect their growing economic influence.
Japan also sees the need to increase the IMF's capital to enable the
institution to continue to play an effective role in supporting member
countries, both in terms of crisis prevention and crisis response, the
statement said.
With regard to Japan's domestic policy, Kan pledged to maintain the economic
stimulus to ensure recovery.
Kan also said that Tokyo will formulate specific medium- and long-term measures
to ''help the Japanese economy dig itself out of a 20-year sluggish growth''
and put it on the track of sustainable and steady growth.
Japan also plans to work out a medium- to long-term path for fiscal
consolidation by crafting a ''medium-term fiscal framework'' that will set the
outline for expenditures for the next three years as well as a ''fiscal
management strategy'' that will define goals both in terms of fiscal deficit
and debt outstanding, so as to secure market confidence in fiscal
sustainability, the statement said.
==Kyodo