ID :
159194
Mon, 02/07/2011 - 18:16
Auther :
Shortlink :
https://www.oananews.org//node/159194
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BOJ head cites need to fight debt woes to keep interest rates stable
TOKYO, Feb. 7 Kyodo - Bank of Japan Governor Masaaki Shirakawa on Monday cited the importance of trying to restore the nation's fiscal health to keep long-term interest rates stable at low levels, while refraining from specifically commenting on the latest downgrade of Japan's sovereign debt rating by Standard & Poor's.
''The reason why interest rates in Japan have remained stable is that market participants believe Japan ultimately has a strong desire to work on...fiscal consolidation through, for example, reform of the tax and social security systems,'' Shirakawa said in a speech delivered at the Foreign Correspondents' Club of Japan in Tokyo.
''To put it the other way around, Japan should appreciate and make every effort to maintain the confidence shown by markets while working on medium- to long-term fiscal consolidation,'' he added, stressing that ''no country can continue to run fiscal deficits forever.''
At the same time, he warned that Japan's fiscal situation is ''in very bad shape'' during a question and answer session held after the speech.
In late January, S&P cut its rating of Japan's long-term sovereign debt for the first time since 2002, saying Prime Minister Naoto Kan's government lacks a coherent approach to reining in its snowballing debt.
The move has put the country in the same group as China and below Spain, a country in focus amid the sovereign debt crisis in Europe.
On the current state of Japan's economy, Shirakawa reiterated that recent data suggests that Japan's economy looks like it is ''about to emerge'' from the stall in recovery seen in the past few months.
He also said that promoting free trade agreements with other countries could also contribute to raising the growth potential of Japan's economy, which is struggling under deflationary pressure.
''The government needs to play its part -- through deregulation, tax reform and the opening of markets -- to provide a business environment that helps to increase productivity,'' he said.
The Japanese government has adopted a policy of promoting trade liberalization and is considering whether to join negotiations for a U.S.-backed Pacific free trade initiative, which would require member economies to cut all tariffs to zero.
''The reason why interest rates in Japan have remained stable is that market participants believe Japan ultimately has a strong desire to work on...fiscal consolidation through, for example, reform of the tax and social security systems,'' Shirakawa said in a speech delivered at the Foreign Correspondents' Club of Japan in Tokyo.
''To put it the other way around, Japan should appreciate and make every effort to maintain the confidence shown by markets while working on medium- to long-term fiscal consolidation,'' he added, stressing that ''no country can continue to run fiscal deficits forever.''
At the same time, he warned that Japan's fiscal situation is ''in very bad shape'' during a question and answer session held after the speech.
In late January, S&P cut its rating of Japan's long-term sovereign debt for the first time since 2002, saying Prime Minister Naoto Kan's government lacks a coherent approach to reining in its snowballing debt.
The move has put the country in the same group as China and below Spain, a country in focus amid the sovereign debt crisis in Europe.
On the current state of Japan's economy, Shirakawa reiterated that recent data suggests that Japan's economy looks like it is ''about to emerge'' from the stall in recovery seen in the past few months.
He also said that promoting free trade agreements with other countries could also contribute to raising the growth potential of Japan's economy, which is struggling under deflationary pressure.
''The government needs to play its part -- through deregulation, tax reform and the opening of markets -- to provide a business environment that helps to increase productivity,'' he said.
The Japanese government has adopted a policy of promoting trade liberalization and is considering whether to join negotiations for a U.S.-backed Pacific free trade initiative, which would require member economies to cut all tariffs to zero.
