October 7, 2002

Statement by Heizo Takenaka, Minister for Financial Services

- Regarding the '' Pay-off '' Problem -

1. On September 30, the Prime Minister instructed to strengthen measures to accelerate the pace of structural reform and strive to overcome deflation together with the Bank of Japan, and completely resolve the non-performing loan (NPL) problem by 2004.
2. According to this course of action based on the policy framework indicated in the Basic Policies 2002, we will promptly crystallize concrete measures and make full efforts to accelerate the disposal of NPLs.
3. While strengthening the policies in such a manner, we will take measures to ensure the stability of the financial payment and settlement functions, and make preparations for the restart of the ''pay-off'' system. Its execution should commence in April 2005 after the complete resolution of the NPL problem, in view of ensuring the stability of the financial system. To achieve this, we will promptly make adjustments to submit a necessary bill at an extraordinary Diet session.
4. This will accelerate the disposal of NPLs while giving due consideration to the stability of the financial system. It will also fully assure the facilitation of financing, including the financing of small- and medium-sized enterprises.
5. We intend to execute four major reforms as soon as possible on a grand scale, namely, tax system reform, regulatory reform, expenditure reform, and the aforementioned financial system reform. While accelerating structural reform, we will take all possible measures for economic management in cooperation with relevant ministers, in order to put the economy on the path of sustainable growth.