Provisional translation

Press Conference by Kaoru Yosano, Minister of Finance and Minister for Financial Services and Economic and Fiscal Policy

(Excerpt)

February 17, 2009

[Opening Remarks by Minister Yosano]

Shortly past nine today, Prime Minister Aso appointed me to serve as Minister of Finance and Minister for Financial Services. As I am now in charge of three ministerial roles, I will do my best to perform my duties so as to obtain Diet approval for bills and the budget. As we are in the economic situation we are in, my mission is to tackle this economic crisis, and it is also important for Japan to devote efforts to international cooperation while remaining mindful of the global economy, rather than focusing exclusively on domestic matters. Therefore, I would like to work on fiscal and financial measures as well as future economic measures in general while seeking the understanding of the people. I would appreciate your cooperation.

[Questions and Answers]

Q.

Former Minister Nakagawa resigned in response to criticism of his behavior at the press conference in Rome. How did you view the turn of events that led to his resignation during the budget deliberations? Also, could you tell us about your thoughts as you accepted the appointment for the additional ministerial post, which seems aimed at rectifying this situation?

A.

I had considerable trust in Mr. Nakagawa. I imagine that this was very regrettable for him, as it is for his friends, including me. This happened just at a time when deliberations on the budget and related bills were under way, and given the state of people’s lives and the national economy, I believe it is my mission as his successor to do my best to obtain Diet approval.

Q.

Serving concurrently in three ministerial posts carries extremely heavy responsibilities and balancing the duties is a difficult issue. Could you tell us specifically on which policy areas you will put priority?

A.

Now that we are in this situation, one policy area is facilitating credit flow, namely, getting the entire financial sector moving smoothly, and another is stimulating demand. Thus, financing and demand are two policy areas we need to tackle. I believe that the government has taken adequate measures under the first and second supplementary budgets for fiscal 2008 and the initial budget for fiscal 2009. However, the QE (preliminary data on quarterly GDP) announced yesterday indicated an economic slump that confounded common sense and was far sharper than we expected, and I think that the people’s response to this will be the most important point. From now on, various opinions will be heard from industry, academic circles and the press, so the government will need to deal with the situation while adequately taking into consideration these opinions as well as the voice of the people.

Q.

In relation to the same issue, I understand that the opinions of the government and the ruling parties will be collected through the usual method, but how will you solicit the opinions from industry and from the various constituent bases?

A.

I have already discussed that matter with the Prime Minister. I suggested to him that it may be necessary to collect opinions from all kinds of organizations, including agricultural organizations, labor organizations and consumer organizations, and he appeared to broadly support this idea. So, I think that the question of how we should gather the people’s opinions will be an important point.

Q.

First, would you tell us what the Prime Minister said to you when he appointed you? Also, how will you deal with matters like conflicts of interest which can be expected to arise as you concurrently serve as Minister for Economic and Fiscal Policy, Minister of Finance and Minister for Financial Services?

A.

First, the Prime Minister did not say anything particularly memorable. Only, he asked me to perform my duties properly. As for the Council (on Economic and Fiscal Policy), it is not a meeting of people with different interests, so I do not think there will be any conflicts of interest.

Q.

Although you say there will not be any conflicts of interest, this council was originally established in order to form opinions by collecting private-sector opinions and incorporating macro-economic viewpoints and to conduct policy management from a standpoint separate from that of the fiscal authorities. I think that that is the role of this council and the role of the Minister for Economic and Fiscal Policy. From this viewpoint, I think that your combining the post of Minister of Finance somewhat contravenes, or somewhat deviates from, the purpose of the establishment of the council. What do you say to this?

A.

I will perform my duties by overcoming issues such as this one.

Q.

In relation to the same issue, could you tell us about your view on the separation of fiscal and financial authorities?

A.

When the issue of the separation of fiscal and financial authorities came up, I was serving as acting chairman of the Policy Research Council (of the Liberal Democratic Party (LDP)). At first, I was not sure whether it was appropriate to separate the fiscal and financial authorities. While this meant an increase in the number of government organizations, the main point of argument on the part of supporters of the separation of the fiscal and financial authorities was, as I understand it, that the convoy system (of financial regulation) was not appropriate. As the FSA (Financial Services Agency) and the Ministry of Finance have been performing their respective roles properly since they were separated, I suppose that the current system is suited to the present society.

Q.

Is there any problem with one minister concurrently overseeing government organizations with different functions?

A.

Ministers too should abide by the Acts for the establishment of relevant government organizations and related Acts, so there is no cause for concern regarding that point.

Q.

In relation to the previous question, it is unprecedented that one person concurrently serves in three ministerial posts. Don’t you think that this appointment imposes too much of a burden in terms of competence or physical health?

A.

Although I would not presume to call myself a man of competence, I believe that I have the physical strength.

Q.

If the performance of duties is undermined, it would be problematic. Is there any concern about such a situation?

A.

What do you mean?

Q.

Won’t the performance of duties be undermined as a result of your concurrently serving in three ministerial posts?

A.

I do not foresee such a situation. If such a situation arises in the future, it will have to be resolved then.

Q.

Would you tell us at what time today Prime Minister Aso consulted you about the appointment to the additional post? Also, could you tell us why you have decided to agree to serve in three posts, which I think is an unusual arrangement?

A.

I received a phone call when I was attending a New Year’s party in my constituency — I think that it was immediately after Minister Nakagawa submitted a letter of resignation — and I was asked to succeed him. As Japan faces the current economic crisis, I have decided to accept the appointment and strive to perform my duties so that I can meet the Prime Minister’s expectations.

Q.

Was the phone call directly from the Prime Minister?

A.

Yes, it was.

Q.

It seems that the immediate challenges will be the question of how to pass the budget bill and related bills through the Diet. As the Diet remains divided (with the House of Representatives controlled by the ruling coalition and the House of Councillors dominated by the opposition parties), how do you intend to proceed with negotiations with the Diet affairs committees of the opposition parties and the LDP so as to pass those bills within the current fiscal year?

A.

The management of Diet affairs is undertaken mainly by the chairmen of the ruling parties’ Diet affairs committees, and I think the most important thing is that we properly deal with the situation so as to avoid betraying the Diet affairs committees’ expectations. As for the management of Diet affairs, I feel I must leave it to the chairmen of the Diet affairs committees.

Q.

You said earlier that the data that has already been announced will provide little basis for deliberations on new economic measures. If that is the case, what data do you think should be used a basis for deciding the financial amount of economic measures? Are you considering filling a GDP gap or making up for a slump in exports or effective demand?

A.

If you had listened to me carefully, you would have realized that what I actually said was that there is not a “significant” basis, and I suppose that people who are calling for new measures are doing so on some basis or other. In addition, I have not said whether or not I will take economic measures. I have not made any reference to that matter and I do not intend to do so now.

Q.

I understand that this is the second time that you are serving as Minister for Financial Services. Could you tell us what the differences are between the situation that you faced previously and the current crisis situation, and how you intend to maintain cooperation in relation to international anti-crisis measures?

A.

The scope of the duties of the Minister for Financial Services covers not only banks but also life and non-life insurance companies and other financial industries, and I think all of these are relatively sound, compared with their equivalents in other countries. However, it is true that major companies as well as small and medium-size enterprises (SMEs) have suffered a heavy blow from sharp drops in order receipts caused by a considerable decline in exports as they approach the end of the fiscal year in March. Furthermore, the fund-raising condition is becoming severe. Companies are facing this situation whether they are major companies or SMEs, so probably the FSA’s greatest challenge for the moment is how to deal with the issue of financing.

Q.

I understand that you are devoting much effort to fiscal reconstruction. However, given the economic slump, there seems to be a view that the current situation requires active fiscal spending. I suppose that some people doubt that you will really resort to bold fiscal spending. Do you intend to resort to active, bold fiscal spending?

A.

Politicians are like an embodiment of pragmatism, so I believe that our mission is to choose appropriate policy options according to the circumstances.

Q.

I understand that you recently suffered a serious illness which could bring about speculation as to whether your physical health is sufficient to enable you to concurrently perform the duties of Minister for Financial Affairs and Minister of Finance, which involve frequent trips abroad. Do you intend to attend all important meetings to be held abroad?

A.

Although I would not presume to call myself a man of great competence, I am physically strong enough, so please rest assured. I think that I should attend various international meetings to an extent that does not impede the management of Diet affairs.

(End)