IMF: Premature for BoJ to withdraw stimulus

Japan’s economy still needs support from ultra-loose monetary policy despite budding signs of recovery, a senior IMF official said, stressing that it was premature for the central bank to consider withdrawing stimulus any time soon.Mitsuhiro Furusawa, the International Monetary Fund’s deputy managing director, said Japan should proceed with gradual increases in the sales tax to rein in its huge public debt as its economy benefits from a rebound in global demand. But Japan’s economy has not strengthened enough to pull the plug on monetary support, Furusawa said, adding that continued ultra-loose policy was crucial to make the recovery sustainable.“I don’t think we’ve reached that time yet,” Furusawa told Reuters on Friday, when asked whether the time is ripe for the BoJ to consider withdrawing its monetary stimulus.“As a whole, it’s a good thing that easy monetary policy continues in Japan,” he said on the sidelines of the Asian Development Bank’s annual meeting in Yokohama, eastern Japan.Japan’s economy has shown signs of life, as exports rose the most in over two years in March and manufacturers’ confidence hit the highest since the global financial crisis a decade ago.BoJ governor Haruhiko Kuroda told a CNBC interview on Friday that he was confident inflation will accelerate “significantly” with massive monetary stimulus and fiscal support.With the economy out of the doldrums, many analysts polled by Reuters expect the BoJ’s next move to be a tightening, rather than a further easing, of monetary policy.But core consumer prices for March rose just 0.2% from a year earlier, well below the BoJ’s 2% target, a sign the Japanese central bank will lag behind its major counterparts in withdrawing monetary stimulus. On fiscal policy, Furusawa said Japan should proceed with gradual increases in the sales tax, so that it can avoid being forced to hike sharply and abruptly, to rein in its debt.“Considering Japan’s fiscal state, it’s desirable to gradually raise the tax rate.There’s no doubt Japan should pursue fiscal consolidation given the size of its public debt,” he said, when asked whether Japan should proceed with a scheduled increase in the sales tax hike in October 2019.Japan’s government has twice delayed a plan to raise the sales tax to 10% from 8%, after an earlier hike from 5% hurt consumption and growth.Prime Minister Shinzo Abe has said he will proceed with the tax hike in October 2019, though some analysts say he may scrap the plan to prioritise growth over fiscal discipline.Tax hikes and spending cuts are considered crucial to curb Japan’s huge public debt which, at twice the size of its economy, is the worst among advanced economies. On China, Furusawa said a gradual slowdown in growth wasn’t a problem because the economy is undergoing structural changes.“The fact that credit growth is accelerating at a pace exceeding that of GDP is worrying. But Chinese authorities are well aware of this issue, so I think the situation is manageable,” he said.IMF deputy managing director Mitsuhiro Furusawa speaks during an interview with Reuters at Asian Development Bank’s annual meeting in Yokohama, south of Tokyo. Furusawa said Japan should proceed with gradual increases in the sales tax to rein in its huge public debt as its economy benefits from a rebound in global demand.Expert calls for ‘early closure’ during arbitration processCompanies looking to resolve issues through arbitration “should aspire for early closure,” according to an expert during the ‘Arbitration Series’, a panel discussion organised by the International Chamber of Commerce Qatar (ICC Qatar).Speaking recently on the topic ‘Persuading the Tribunal’, Wayne Clark, vice president and head of Dispute Management with HKA (Hill International), elaborated on ways where parties and their legal counsel may persuade the tribunal to find their favour.Clark - a chartered quantity surveyor, arbitrator, and mediator with over 40 years of international experience - reviewed the three main features of arbitration: the procedure, written submissions, and the oral hearing.  He stressed that the “parties in the procedure juncture should look for early closure,” and noted that the tribunal “has a duty to conduct the arbitration in an efficient and cost-effective manner,” in accordance with the ICC Rules and Qatar’s Arbitration Law. According to ICC Rules, “the tribunal and the parties shall make every effort to conduct the arbitration in an expeditious and cost-effective manner.”Clark also provided examples on delaying procedural and tactical manoeuvres that parties might use while solving disputes by arbitration like the appointment of arbitrators and experts, requests for stay of proceedings, disagreement over terms of reference, requests for extensions of time to submit pleadings, preliminary and other meetings, bickering over disclosure, and telling the tribunal how to manage the arbitration.He said the tribunal “should deny any delaying tactics” used by disputing parties, and called on parties and their legal counsels “to be well-prepared” before starting the arbitration process.He noted that statements of claim, defence, and counterclaim “should be a fine-tuning exercise only.” “There should be no need for more time for submitting these documents than the time allowed in the rules or as directed by the tribunal,” he said.According to Clark, the tribunal, which has been chosen by the parties, should be aware of the procedure and know how to manage arbitration, assuring that parties should trust the members of the tribunal and allow them to manage the arbitration in order to avoid unnecessary delay and expenses.Underscoring the importance of written submissions, Clark noted that the tribunal’s focus “shall be on the facts, the arguments, and the evidence as presented by the parties.”  “The key written submissions in arbitration are the claimant’s statement of claim and respondent’s defence and counterclaim. These two submissions, together with the exhibits (or evidence), contain the essence of each party’s case,” Clark said.On oral hearing, Clark said stories introduced by parties “must be clear, concise, well-supported, and persuasive to the tribunal.”“Parties and legal counsel should cooperate with the tribunal throughout the process to ensure an efficient and cost-effective arbitration and witnesses should persuade the tribunal by telling the truth,” he explained.‘Arbitration Series’ is a monthly campaign on the importance of arbitration, which is part of the 2017 programme of the ICC Qatar’s Commission on Arbitration and ADR (alternative dispute resolution).