Japan Finance Minister Vows Fiscal Reforms

New Japanese Finance Minister Hiroshi Mitsuzuka said Sunday that Japan will carry out reforms in government finance in the next five years to get rid of a huge fiscal deficit.

In addition to the reforms in government finance promised by Mitsuzuka, an economic journal reported on Sunday that Prime Minister Ryutaro Hashimoto plans to announce goals for liberalizing financial markets during the same period.

The daily Nihon Keizai Shimbun said Hashimoto seeks to carry out the Japanese equivalent of Britain’s 1986 “Big Bang” reforms that did away with barriers between various financial institutions.

Hashimoto is expected to hold talks today with Mitsuzuka and Justice Minister Isao Matsuura to instruct them in the Big Bang goals, the Nihon Keizai said.

The prime minister plans to draft a government bill by 1998 so that market reforms could take place by 2001, which is also the target year for the government’s fiscal reforms and parallel moves to streamline the central government bureaucracy.

Hashimoto’s three main pillars in market reforms will be liberalization, transparency and globalization, the daily said.

The goals include scrapping barriers between insurance firms, banks and brokerages, as well as lifting controls on interest rates and transaction fees.

They also include abolition of long-term credit banks’ monopoly on trust fund activities and various restrictions on issuing bonds and securities, the Nihon Keizai said.

In addition, financial institutions would be required to open up information for investors and depositors in order to create a fairer market, the daily said.

Hashimoto has said Japan must emulate the U.S. and British market reforms of the 1980s, which enabled a regular flow of funds for new industries and firms, the daily said.

By 2001, Japan must be on the firm road to recovery in government finance as well, Mitsuzuka said Sunday on public television NHK.

“We must carry out fiscal reconstruction in five years,” Mitsuzuka said. “Japan is the worst among the G-7 [Group of 7 industrialized] countries and we would be bankrupt a long time ago if we were a private firm.

“This is an urgent task and we should be looking for reforms as early as possible, maybe in 1999 or maybe in 2000, instead of waiting until 2001,” Mitsuzuka said.