mandate will undoubtedly bring. we are also pleased to support the limited sale of fund gold to establish an endowment to generate income. in fact, we see this as a critical component of the new income model, without which it may be difficult for the fund to close its budget deficit. we look forward to a prompt resolution on this issue, particularly from the major shareholder. strategic directions 13. as we said in our imfc statement last october, reform must go beyond quota and voice. the fund should rethink the areas where it has a comparative advantage and where it does not. we are glad to note that the managing director has taken up the suggestion and made this the focus of the refocusing. thus, we support the shift in focus in the three broad areas : strengthen analysis on macro - financial linkages, integrating multilateral perspectives in bilateral surveillance, and sharpening the work in financial markets. 14. we welcome the use of these same yardsticks in guiding the ambitious expenditure savings that the managing director has proposed. when the imfc asked for significant expenditure reductions last october, we are aware that some of these reductions have been painful, particularly those arising from the difficult decision to reduce staffing levels at the fund. it is critical that in managing this process, the fund does not lose the capacity to deal with emerging issues effectively and with the high level of professionalism that we have come to expect. in that regard, we consider the diversity of the fund ’ s staff an important asset that ought to be preserved in the restructuring process. as an international organization, we believe that the face of the fund ought to reflect that of its membership. more importantly, diversity in terms of expertise, experience, linguistic abilities and cultural backgrounds, helps the fund leverage on a wider base of knowledge, understand country circumstances and navigate the subtleties of dealing with a diverse membership more effectively. 15. we see the managing director ’ s statement as a good basis for the fund to move forward and appreciate the urgency with which he has sought to implement the strategy. in particular, we welcome the budgetary savings projected under the medium - term budget and the envisaged implementation of reforms in the other organizational aspects. we would only urge more careful consideration to be given before agreeing to the proposal to charge for technical assistance. technical assistance is a key public good of the fund and is critical to improving surveillance and the capacity to design and implement macroeconomic policy in many developing and low - income countries. as such, we

toshihiko fukui : the japanese economy and asia speech by mr toshihiko fukui, governor of the bank of japan, at the asian affairs research council, tokyo, 26 september 2003. * * * it is a great pleasure to have this opportunity to address the asian affairs research council. today, after touching briefly on the current state of the japanese economy, i would like to share with you my thinking on the following topics : the deepening interdependence between japan and the rest of east asia under globalization ; the implications of this deepening interdependence ; and the improvement of financial and capital markets in the region as a key factor for east asia's economic growth. before i start, let me note that in today's remarks i focus on east asia, primarily the newly industrializing economies ( nies ), asean, and china, not asia in general, which would include india and other south asian countries. i. current state of the japanese economy in the bank of japan's semiannual economic outlook published in april 2003, the standard scenario was that as exports and production increased with the recovery of overseas economies, a selfsustaining recovery would gradually gain momentum in the second half of fiscal 2003. there were a number of uncertainties in this standard scenario. in fact, since spring 2003, the uncertainty about the economic outlook was amplified against the background of the war in iraq, severe acute respiratory syndrome ( sars ), volatile movements in the stock and foreign exchange markets, and persistent concern about financial system stability. as a result, an excessively pessimistic view on the economic outlook seemed to have spread toward the summer. such an excessively pessimistic view, however, has been receding since the summer. domestic demand has begun to show some signs of improvement. corporate profits continue to increase, and the ratio of current profits to sales for this fiscal year is likely to reach the highest level since the collapse of the bubble economy. judging from various survey results and in light of recent machinery orders, a leading indicator, the trend of recovery in business spending, by large manufacturing companies in particular, is anticipated to become more evident. despite continuing weakness in private consumption as shown in sales statistics, we have also begun to observe some favorable signs of change on the employment and income front. wages and employment figures, including those for part - time workers, have stopped falling. overseas economies appear to be showing signs of gradual