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Press Release


August 27, 2016

Ministry of Finance

Joint Press Guideline: The Seventh Korea-Japan Finance Dialogue (Seoul, Korea)

  1. Mr. Yoo Il-ho, Deputy Prime Minister and Minister of Strategy and Finance, and Mr. Taro Aso, Deputy Prime Minister and Minister of Finance of Japan met for the 7th Korea-Japan Finance Dialogue on August 27, 2016 in Seoul, Korea. The Ministers exchanged their views on various issues including the current global and regional economy, the two countries’ economic and financial market situation and the ways to strengthen bilateral and multilateral cooperation. The Ministers agreed that continuing the Dialogue will be beneficial for strengthening economic and financial cooperation between the two countries.

  2. The Ministers recognized that the global economy is on a gradual recovery path but remains weaker than desirable. The global economic environment is challenging and downside risks persist, highlighted by fluctuating commodity prices, low inflation and geopolitical risks.  Financial market volatilities remain high by the on-going and expected risk factors such as uncertainty following the outcome of the referendum on the UK’s membership in the EU. Against this backdrop, the Ministers pledged to continue relevant policy cooperation through global and bilateral fora, while monitoring developments in the global economies.

  3. The Ministers shared the view that macroeconomic conditions remain sound in both countries. But the Ministers also noted that a lower potential growth rate and the possibility of volatilities in the global financial markets have become the common challenges for both countries and recognized that adequate counter measures are important. In this regard, they reiterate their commitments to using all policy tools – monetary, fiscal and structural – to foster confidence and strengthen growth.

  4. Minister Yoo mentioned that the Korean economy is on a gradual path towards recovery. Korea’s GDP growth rate in the second quarter of 2016 has recorded 0.7%, improved from 0.5% of the previous quarter of 2016. The recent recovery mainly attributes to the recovery of private consumption and investment, which is mainly contributed by the policy measures like extending the period of consumption tax reduction and front-loaded budgeting. For vitalizing the private sector and creating qualified jobs, Minister Yoo emphasized that the supply side policy measures, such as establishing a regulation free zone, as well as measures for advancing service sector and structural and industrial reforms will be implemented successfully, while the expected supplementary budget of this year is supposed to maintain recent growth trajectory through boosting domestic demand.

  5. Minister Aso said that although the economic fundamentals of the Japanese economy are solid, private consumption lacks strength, compared with improvements in corporate earnings and employment. He also explained that Japanese government had decided to postpone the planned consumption tax hike to 10 percent to October 2019 due to this background. Nevertheless, he also emphasized that Japanese government remains committed to advancing fiscal consolidation while implementing fiscal policy flexibly and maintains firmly the target of achieving a primary surplus by FY2020 through accelerating expenditure and revenue reforms on all fronts and raising the potential growth rate by further actions on the structural issues and promoting work style reforms. He also mentioned that Japanese government has formulated a new economic stimulus package with total size of 28.1 trillion yen. Finally, he concluded that Japanese government will continue to achieve both economic revitalization and fiscal consolidation with these fiscal and structural measures.

  6. The Ministers shared the view that rigorous structural reforms are crucial for sustaining economic growth engine and enhancing competitiveness of the industries, and reiterated their commitment to continue implementation of the reforms. The Ministers also acknowledged the importance of mutually benchmarking and cooperating in issues of common interest and concern, which could include dealing with drastic change of demographics, boosting productivity, and reducing labor-market duality. In that regard, the Ministers agreed to facilitate bilateral communication channels.

  8. The Korean government has proposed to strengthen the bilateral economic cooperation between the two countries and as a token of the cooperation, to establish a new Bilateral Swap Arrangement (BSA) with the same amount to both countries. This BSA contributes to enhancing the regional financial stability. Both governments agreed to start discussing details of the BSA.

  10. The Ministers welcomed the ongoing expansion of bilateral cooperation on issues pertaining not only to the two countries but also to the regional and global economies. Noting that the Korea and Japan are both key players in the G20 process, the Ministers determined to work closely for the success of the G20 Hangzhou Summit, with a view to further strengthening collaboration on a wide range of issues under the process. They especially shared common views on the importance of activities such as strengthening global financial safety net with the IMF at its center, improving international financial architecture, combating the financing of terrorism and promoting quality infrastructure investment. They also determined to support the Paris Club discussion of a range of sovereign debt issues, and Minister Aso welcomed again the admission of Korea to the Paris Club in July 2016.

  11. The Ministers welcomed the progress in the regional financial cooperation and agreed to further deepen the cooperation. They welcomed the successful outcomes of the 19th ASEAN+3 Finance Ministers and Central Bank Governors’ Meeting and the 16th Trilateral Finance Ministers and Central Bank Governors’ Meeting of China, Japan and Korea held in Frankfurt, Germany, on May 3, 2016. The Ministers agreed that, in order to promote regional financial cooperation, it is important to ensure the operational readiness and effectiveness of CMIM especially through clarifying the activation process of the IMF de-linked portion and conducting of the upcoming CMIM-IMF Joint Test Run. The Ministers welcomed the AMRO’s successful transition into an international organization and commended Dr. Yoichi Nemoto, the former AMRO Director, for his great efforts and leadership in realizing this historic achievement. The Ministers welcomed the Asian Bond Markets Initiative (ABMI) Medium term Road Map and look forward to more innovative, concrete outcomes of the cooperation in ABMI.

  12. The Ministers shared the view that Multilateral Development Banks (MDBs) have a critical role in supporting quality infrastructure investment and sustainable development. They agreed to make joint efforts, including strengthening the mid-long term strategy of the ADB for infrastructure investment in Asia, enhancing coordination and cooperation of both countries under MDBs and supporting joint actions for quality infrastructure investment by introducing and promoting procurement process that takes account of value for money and quality of infrastructure.

  13. The Ministers agreed to work together for advancing negotiations on the Regional Comprehensive Economic Partnership (RCEP) and the China-Japan-Korea FTA. The Ministers also agreed to jointly contribute to the development of global trade and continue with international coordination efforts to prevent a surge of protectionism and to keep our markets open.

  14. The Ministers shared concern about the DPRK’s nuclear, other weapons of mass destruction and ballistic missile programs which constitute a grave violation of all relevant UN Security Council resolutions and agreed on importance of effective implementation of the international sanctions on the DPRK.

  15. As part of today’s Finance Dialogue, sub meetings on macroeconomic policy, budget policy, tax policy, customs and tariff policy and government debt management policy were held between relevant Directors-General, where views were exchanged on respective policy priorities that the two countries face.

  16. The Ministers noted that the Korea-Japan Finance Dialogue, which was initiated in 2006, is a very useful forum where the two finance ministries share various experience and promote common understanding on future agendas. They agreed to continue to enhance communication between the two ministries at various levels and functions. The eighth Korea-Japan Finance Dialogue is expected to take place in Japan in 2017.