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Friday, Oct. 12, 2012
IMF-WORLD BANK IN TOKYO
Sovereign debt, strong yen among tough topics at meetings
By JUN HONGO
When Japan last hosted the Annual Meetings of the International Monetary Fund and the World Bank Group in September 1964, Tokyo was in the midst of preparing for the Summer Olympic Games which were to kick off a month later.
The country had overcome postwar reconstruction and the economy was on a roll. Japan had joined the Organization for Economic Cooperation and Development (OECD) earlier in the year and completion of the Tokaido Shinkansen line was only weeks away.
"Kakuei Tanaka, who was Japan's finance minister at the time, said that hosting an event as big as the IMF meeting has more value than organizing 100 expos" in promoting Japan's robust economic growth to the world, a Finance Ministry official said last month.
With 2012 marking Japan's 60th anniversary since joining the IMF and World Bank, the country is hoping to make a similar appeal.
"We see the 2012 meeting as an opportunity because Japan is ready to step up and lead the global economy despite last year's March 11 disaster and the sluggish economy," the Finance Ministry official said.
The IMF-World Bank meeting is gathering executives from both organizations as well as finance ministers and central bank governors from 188 countries to Tokyo through Oct. 14. Over 20,000 people are expected to turn out for the events and seminars planned during the six-day period, including business leaders from the private sector and representatives of other financial institutions.
The IMF states its mission as ensuring "stability in the international system" through keeping track of global economic trends, aiding countries with economic difficulties and assisting member countries. The World Bank, meanwhile, defines its main task as reducing poverty and supporting development around the globe.
Japan owes much of its economic prosperity today to the two organizations. The World Bank outlines Tokyo's early involvement with the group as follows:
"Japan joined the World Bank in August 1952 and began to borrow the large sums necessary for its postwar reconstruction. The first loan, signed in 1953, was for an electric power generating project. In the 1950s, the loans were directed toward electric power generation, including dam construction, and the steel, automobile, manufacturing and shipbuilding sectors."
Loans made in the 1960s, meanwhile, were targeted for building transport infrastructure, including the Tokaido Shinkansen line.
"The total amount borrowed by Japan from the World Bank in 31 loans amounted to $863 million, with the final repayment made in 1990," the World Bank said, adding that Japan today is the second largest supplier of capital to the organization and an "important partner" for the World Bank in a variety of fields.
Japan has also maintained its status as the second largest stakeholder in the IMF after the U.S. since 1999.
The 2012 annual meetings in Tokyo will take place under such a backdrop, with Japan, having experienced being both the borrower and supplier of the IMF and World Bank Group, hosting sessions aimed at resolving global economic and monetary issues.
One major topic will be Europe's sovereign debt risk, as it has remained a source of concern in recent years. While the European Central Bank's outright monetary transactions (OMT) program had an influence on stabilizing the eurozone, some say the problem is far from resolved.
"The euro issue will continue," Kazuko Yamazaki, a senior economist at Daiwa Institute of Research, said in a lecture on Oct. 1. The expert pointed out that even minor shifts, including in Greece where voters could turn against austerity measures, may quickly change the situation in Europe.
But participating institutions will have more than just Europe's sovereign issues to tackle.
"Some of the key topics will be global health, employment, setting the infrastructure in Africa ... food security is also crucial," a government official said last month. "Then there is the post-Millennium Development Goals. Discussing measures against food and energy cost prices is also important."
The annual meetings will also be the de facto debut stage for Japan's Finance Minister Koriki Jojima as well as World Bank Group President Jim Yong Kim.
The appointment of Jojima to the post on Oct. 1 was greeted with surprise by some, since the veteran lawmaker had never been named to the Cabinet before. While Jojima worked as the ruling Democratic Party of Japan's Diet affairs chief, how he will fare against a number of global economic leaders remains to be seen.
Jojima was scheduled to meet with the Group of Seven finance ministers and central bank governors on Oct. 10, when his task included explaining Japan's stance on the excessive appreciation of the yen and how it may be damaging the global economy. He was also expected to exchange opinions with his U.S. counterpart, Timothy Geithner, during the IMF meeting.
World Bank President Kim, who began his five-year term in July, will also face his first annual meetings. The former president of Dartmouth College, who succeeded Robert Zoellick, will have his ability put to the test as the World Bank tries to collaborate with member countries on a variety of topics.
The annual meetings kicked off in Tokyo on Oct. 9 , when Olivier Blanchard, the IMF economic counsellor and director of the research department, released the World Economic Outlook.
Seminars on sovereign risks and financially stability, as well as discussions on sustainable growth were among the events for Oct. 10.
IMF Managing Director Christine Lagarde and the World Bank's Kim were scheduled to appear for a press briefing on Oct. 11, which was to be followed by seminars on topics including creating jobs, fighting poverty and securing global health.
The annual meetings plenary will take place on Oct. 12, with the International Monetary and Financial Committee (IMFC) meeting and the Development Committee (DC) meeting following Oct. 13.
A two-day dialogue was also scheduled to be held in Sendai on Oct. 9 and 10, where participants were to discuss disaster risk management through lessons learned from the Great East Japan Earthquake. Both Kim and Lagarde were scheduled to visit areas in the city that were devastated by the March 11 quake and tsunami.
"With growing uncertainty facing the global economy, cooperation and partnership among the countries has never been more important," Hiroshi Naka, secretary general of the Japan Secretariat for the 2012 Annual Meetings of the IMF and the World Bank Group, said in a statement.
"We want to strengthen the bonds between the countries and forge the global resolve to sweep away the uncertainty surrounding the global economy," he said, expressing his hopes for the meetings.