IMF optimistic about Japan debt cut effort

By Yoo Choonsik

DAEJEON, South Korea (BestGrowthStock) – A senior IMF official said on Tuesday he was optimistic about Japan’s effort to cut back public debt despite the weekend’s election results because the main political parties agreed on the need for urgency.

“You saw from the campaign that the main opposition party as well as the DPJ (Democratic Party of Japan) was speaking about the need to adjust taxes for public debt,” Anoop Singh, director of the International Monetary Fund’s Asia and Pacific department, told Reuters in an interview.

The comment came as concerns grew that the Japanese ruling party’s defeat in an upper house election over the weekend could deter Prime Minister Naoto Kan’s efforts to cut down the country’s heavy public debt.

“I think that there is a greater consensus in Japan about the need for action. And, therefore, we should wait and see for the government to come out with details,” he said on the sidelines of an international conference.

Singh also said recent signs of moderating growth in Asian economies were “normal” given the sharp recovery from the 2007-2008 global crisis.

“The growth rates are going to come down a bit. They will moderate to a sustainable pace,” he said.

He said the downside risks to Asian economies had increased over the past several months, mainly due to the lingering debt problems in Europe, but added Asia had room to cope with even if the risks materialized.

“We are moving up our baseline but we are saying that the downside risks are higher,” he said.

“If these downside risks materialize…(Asian countries) have room for action both on the fiscal side and monetary side,” he added, referring to growing domestic demand that could offset any decline in demand outside the region.

(Editing by Jonathan Hopfner)

IMF optimistic about Japan debt cut effort