Highlights: IMF, World Bank meetings in Tokyo
TOKYO (Reuters) - The following are comments on Thursday from finance officials in Tokyo for the semiannual meetings of the International Monetary Fund and World Bank.
WORLD BANK HEAD JIM YONG KIM ON GROWTH SLOWDOWN IN CHINA
"In talking with the Chinese authorities, I am completely convinced that they understand exactly the nature of the problem and they're taking every measure - they're going through a political change right now and once the political change is complete, my sense is that they'll be very aggressive in trying to restore growth."
KIM ON TENSIONS BETWEEN CHINA, JAPAN, SOUTH KOREA
"There are more things that bind together these three countries than keep them apart."
"I'm very optimistic that in the next few months, with the unfolding of various political and other events, I'm very optimistic that the leaders of these three countries will come back to their fundamental understanding of the importance of cooperation in the region."
U.S. TREASURY SECRETARY TIMOTHY GEITHNER ON FISCAL CLIFF
"I don't think the strategy of deferring and delaying is a responsible strategy. It might feel like an easy path at the moment but it will still leave a set of big questions hanging over the country. I don't think that will help."
"Our belief is that we can use the period between the election (on November 6) and the end of the year to negotiate a framework of reforms that can be phased in over time. The magnitude of policy reforms we have to agree on to achieve sustainability are somewhere between 2 to 3 percent of GDP. They're a very modest set of changes and if you do it in a balanced way with a mix of tax reforms ad spending cuts you can do a very good job of gradual reforms and still create some room for investments."
GEITHNER ON EUROPE
"Even though they have a lot of details to work out, the agreement on that basic framework makes it much easier for Europe to navigate what is going to be a long difficult period of reform."
GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE
"There is no country in Europe which would give any thought to the question of abolishing the euro."
"I am convinced that we will be able to tell our friends and partners around the world that Europe is in the process of solving its problems and Europe is aware of its responsibility."
"We are convinced that in Germany and Europe it is of central importance ...that the public believes that there are reasons to trust the long-term foundations of our policies."
"Therefore, we believe that we will fulfill our international obligations with our policy of growth-friendly deficit reduction."
SCHAEUBLE ON CONSOLIDATION'S NEGATIVE IMPACT ON GROWTH
"One should also consider the advantages of the common currency. No one was forced to become a member of the European monetary union.
"Greece has repeatedly made clear that it does whatever it can to stay in the monetary union. And when Greece wants that and implements measures, no one will force Greece out of the euro zone."
SCHAEUBLE ON IMF SUGGESTION GERMANY STIMULATE DOMESTIC DEMAND
"Such suggestions reveal not so great knowledge about Germany's situation. Domestic demand does rise in Germany."
"We are the growth engine of Europe and we believe it is not helpful when one creates an impression that there are solutions that would be easier."
"I don't believe in criticizing others. That's cheap. It would be much more reasonable when others would solve their problems and Europeans theirs."
"The IMF has said time and again that high public debt poses a problem. So when there is a certain medium-term goal, it doesn't build confidence when one starts by going in a different direction."
"When you want to climb a big mountain and you start climbing down, then the mountain will get even higher."
JAPAN FINANCE MINISTER KORIKI JOJIMA ON FISCAL STIMULUS
"The government will do the utmost to ensure financial market stability in the near term and we need to take fiscal measures to stimulate the economy as needed. In the medium to long term, we need to tackle fiscal discipline and economic growth as a pair of wheels. As Europe's debt crisis clearly shows, once fiscal policy loses market confidence, it would cause a vicious cycle of a spike in government bond yields and worsening of public finances."
"Rebuilding public finances is a common task for developed countries ... Japan has enacted a law to increase the sales tax to 10 percent as part of effort to achieve prime budget balance by fiscal 2020/21 ... and this shows our stance of sincerely adhering to our promise to international society."
JOJIMA ON CURRENCIES:
"Despite the fragile economic fundamentals, a strong yen is continuing. I told (IMF Managing Director Christine Lagarde) about our concern that further yen gains would pose major downside risks to the Japanese economy, which is recovering from (last year's) earthquake. Managing Director Lagarde told me that the yen is somewhat overvalued."
JOJIMA ON EUROPE AND CHINA (after the G7 meeting):
"I said it is important for Europe to fulfill its responsibility to steadily carry out agreed steps and that I expect that will ensure market stability."
"Chinese economy is slowing down but there's room for fiscal and monetary policy steps to achieve its growth target of 7.5 percent. There occasionally arise difficult problems between Japan and China as we are neighbors, but Japan-China economic relationship is close and (there is) interdependence, and I believe its smooth development is important for development of Asia and the world economy."
JOJIMA ON EUROPE
(from the text of a speech prepared for the meetings)
"The debt and financial-sector problems in Europe pose the biggest downside risk to the global economy. Europe must make its own efforts to prevent the spread of the crisis and to stabilize the market. First of all, it is important to quickly put into operation the measures that have been agreed on and announced to date."
"The currency unification in Europe is an ongoing magnificent experiment in history. We hope that European countries will overcome conflicts in opinions and strengthen their efforts to unite together and establish a monetary union in the true meaning. Japan is ready to make contributions as necessary while keeping watch on these European efforts."
JOJIMA ON S.KOREA COOPERATION
"I discussed with South Korean minister Bahk the global and regional economic situation. We agreed that both countries would cooperate in the framework of the G20 and ASEAN 3 and that our finance authorities will closely work with each other on the economic and financial front. We shared the view that the enhanced bilateral currency swap agreement was beneficial over the past year and that we are ending it this month as planned. We also agreed that we will hold the next bilateral finance dialogue at an appropriate time."
WORLD BANK'S KIM ON WORLD'S POOR:
"We are in challenging times. Food prices remain high and volatile, growth in high income countries is weak, and developing countries, which have been the engine of growth, will not be immune the increased uncertainty in the global economy."
"The economic announcements emanating in recent weeks have been sobering. Everyone is vulnerable in times of uncertainty but especially the poor who have few, if any safety nets and resources, and live from day to day."
IMF CHIEF CHRISTINE LAGARDE CALLS FOR POLICY ACTION
"We expect action and we expect courageous and cooperative action on the part of our members."
"Whether you turn to Europe to the United States of America to other places as well, there is a level of uncertainty that is hampering decision makers from investing from creating jobs ... We need action to lift the veil of uncertainty."
LAGARDE ON EUROPE DEBT CRISIS AND U.S. 'FISCAL CLIFF'
"There are threats on the horizon, threats that can be addressed, should be addressed but are not necessarily addressed. Here I'm talking about ... the policy decisions that should be taken within the euro zone, in particular, and policy decisions that should be made in the United States of America to address the issue of 'fiscal cliff' and debt ceiling."
LAGARDE ON TOP CHINESE OFFICIALS NOT ATTENDING MEETINGS
"All economic partners in this region are very critical for the global economy. Certainly at the IMF, where we encourage cooperation ... we hope that differences no matter how longstanding can be resolved harmoniously and expeditiously and can be beneficial not only to those countries ... but also to the global economy."
LAGARDE ON TALKS WITH EGYPT TOWARD IMF PROGRAM
"As you know, one of your (Egypt) authorities indicated he was hoping for closure in the middle of next month. Fingers crossed ... I am very confident we can discuss productively, reach agreement, and help Egypt as much as we can."
LAGARDE ON EFFORTS BY EURO ZONE TO DEAL WITH DEBT CRISIS
"As is often the case with the euro zone, there is good news and bad news. Good news is the fact that this European Stability Mechanism that had been discussed and in the making for the last months has now been christened ... That is the good news. In terms of speed, the bad news is that for it to actually operate there will be a legislative and often parliamentary process for the fund to effectively work."
LAGARDE ON IMF'S ROLE IN EUROPE
"We are flexible but when we monitor we want to know that what we monitor is something that we are comfortable with, that makes sense from an economic point of view, which means that we also want to participate in the design."
BANK OF JAPAN GOVERNOR MASAAKI SHIRAKAWA
"The outlook for the global economy is very difficult, so I hope to discuss the risks to the outlook at the IMF meeting."
"It is unfortunate that People's Bank of China Governor Zhou did not attend (this week's meetings). But my understanding is that the deputy governor is leading China's delegation here. Japan and China have close economic ties and I hope to continue communicating with the PBOC."
"When explaining Japan's economic outlook, currencies are a big part of that, so from that standpoint I want to explain our monetary policy at the G7."
ECB GOVERNING COUNCIL MEMBER EWALD NOWOTNY
"The ECB assumes that we'll have a lower inflation rate next year, below 2 percent.
"The ECB does not commit itself to future policy but my personal view is that at the moment I don't see any need to change the interest rate policy."
"Realistically, I hope that there will be a legislative basis for the European banking supervision but in terms of operations I don't think it will be in place before mid-2013."
FINANCIAL STABILITY BOARD CHAIRMAN MARK CARNEY
"There are signs that reforms ... in euro zone countries are starting to improve their competitiveness and their current account. It is important that the current momentum is not lost..."
"The core of the global banking system has substantially improved their (global systemically important financial institutions') capitalization and I would say liquidity. But there are regions of the global economy where that is not the case."
"(FSB) members expressed concern about unresolved issues in the cross-border application of regulation (of derivatives). They called on jurisdictions to put in place their legislation and regulation promptly and to act by end of 2012 to identify and address conflicts, inconsistencies and gaps in their national frameworks."
BRAZIL FINANCE MINISTER GUIDO MANTEGA
"When it comes to European countries, our view is that they're taking the correct measures, that the instruments being built are adequate, namely the common banking supervision and a fiscal union, or the European Stability Mechanism."
"But the problem is that these instruments are still not being used and implemented. Implementation keeps being delayed."
(Reporting by Reuters IMF and World Bank reporting team)
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