Download Message from the Governor

Message from the Governor
With the publication of our Annual Report 2003, I would like to express my heartfelt appreciation for your continued support for our mission.
1. Reviewing Fiscal 2002 in Retrospect
(1) World and Japanese Economies
The world economy grew at 3% in 2002, a faster pace than 2.3% in the previous
year. The recovery of the U.S. economy, however, was weak due to the slowing
private consumption, while the eurozone, suffering from a high rate of unemployment, posted a slowdown in domestic demand. The Asian economies grew by
6.5% in 2002, a relatively robust pace attributable to high growth in China.
However, there remained concerns over the impact of the SARS epidemic on
China’s economic activity in the first half of 2003.
Real GDP in Japan grew 1.5% in fiscal 2002, an improvement from the previous year’s record of negative growth of 1.2%. This was due to a modest increase
in private consumption and external demand that offset declining demand in the
public sector and private investments. Overall, deflation gripped the economy,
resulting in negative growth in nominal GDP in fiscal 2002.
In 2003, the world economy is forecast to grow at a somewhat faster pace
than that in 2002. However, economies in the industrial countries are facing a
number of challenges, including twin deficits in the fiscal budget and the balance
of payments in the United States, unemployment in Western Europe and deflation in Japan. Thus, the possibility must be kept in mind that, amid increasing
economic globalization, these factors might cause a significant negative impact
on Asian economies, which have sustained relatively robust growth.
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(2) Development of Policy Framework
In fiscal 2002, a number of issues were discussed in international conferences
that have direct relevance to JBIC operations. During the G8 Summit held in
June 2002, at Kananaskis, global economic growth, poverty reduction and sustainable development were the key subjects of discussions. The World Summit
on Sustainable Development (WSSD), held from late August to September 2002
at Johannesburg, adopted the Implementation Plan as a guide for pursuing sustainable development, and discussed the need to increase Official Development
Assistance (ODA). Prior to the conference, the Government of Japan announced
the Koizumi Initiative, pledging an active role in supporting such key areas as the
education sector, in partnership with the international community to promote selfhelp efforts of developing countries.
On the domestic front, the Comprehensive Measures to Fight Deflation were
announced at the end of October 2002, pledging to utilize the functions of policybased financing institutions, including JBIC. The report, entitled On the Reform of
Policy-Based Financing, prepared by the Council on Economic and Fiscal Policy
(CEFP) in December 2002, called for the active utilization of policy-based financing, together with a methodical implementation of the Reorganization and
Rationalization Plan for Special Public Corporations during the intensive bad loan
disposal period until the end of 2004.
(3) JBIC Operations in Fiscal 2002
JBIC recognizes the importance of conducting its operations by drawing on these
domestic and international policy discussions, while adhering strictly to the principle of its complementary role in private-sector activities.
Our overall operational record in fiscal 2002 was as follows: Loan, investment
and guarantee commitments decreased by 4% from the previous year to ¥1,947
billion, while the outstanding commitments fell by 2% to ¥21,780.6 billion at the
end of fiscal 2002.
In International Financial Operations (IFOs), we provided foreign currency
loans for small and medium-sized enterprises (SMEs) and other Japanese firms
operating overseas through Japanese private financial institutions. These operations were designed to support their financing in line with the Comprehensive
Measures to Fight Deflation. We also instituted a guarantee facility to shore up
the credit standing of performance bonds in plant exports issued by Japanese
private financial institutions. In line with the Reorganization and Rationalization
Plan for Special Public Corporations, the guarantee facility was also actively utilized in financing the import of aircraft.
In Overseas Economic Cooperation Operations (OECOs), we adopted a new
Medium-Term Strategy in April 2002, covering the three-year period through
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March 2005. In fiscal 2002, the focus of the operations was placed on such sectors as power, natural gas, transport and social services in Asia. We extended
ODA loans to finance new projects in India for the first time in five years, which
resulted in an increase in the share of loans provided to Southwest Asia in the
total volume of ODA loans. Environmental projects also reached 40% of the total
ODA loans. This reflected our efforts to provide effective support by meeting the
diverse development needs of the respective recipient countries, with a focus on
priorities set forth in the Medium-Term Strategy.
In April 2002, we released the new JBIC Guidelines for Environmental and
Social Considerations to make sure that the environmental and social aspects
are fully taken into consideration through the implementation of both IFOs and
OECOs. We are now moving forward to the full implementation of the provisions
of these guidelines in October 2003.
2. Prospect for Fiscal 2003
In fiscal 2003, our special focus is on addressing the needs of our clients. We are
committed to providing value-added products and services that the private sector
finds difficult to provide for itself. Among our clients are Japanese firms and other
clients as well as our partners, including developing countries. We intend to
achieve our goal by drawing on our strengths, such as risk-mitigating functions as
an official institution, close relationships with other countries and multilateral institutions as well as knowledge and know-how on development practices and international finance. We will, thereby, contribute to the sound development of the
Japanese and developing economies. Furthermore, we are making constant
efforts to systematically improve operations and increase their transparency
through the Performance Measurement for Strategic Management introduced in
April 2002.
The Japanese economy is still in a difficult situation, and poverty and income disparities in developing countries continue to present major challenges to us. Under
these circumstances, our mission to pursue the sound development of Japanese
and developing economies is increasingly important for Japan seeking to live in
harmony with the international community. The management and staff of JBIC are
committed to fulfilling our mission and role with increased effectiveness and
efficiency. Your full-hearted support is vital to enable us to fulfill our commitments.
August 2003
Kyosuke Shinozawa
Governor
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