- The Washington Times - Saturday, January 5, 2002

TOKYO Japanese Prime Minister Junichiro Koizumi vowed yesterday to carry out reforms even more aggressively in the new year, and reassured the nation that the short-term economic deterioration would ultimately be worth the sacrifice.

Mr. Koizumi, who bucked convention by addressing reporters in a traditional Japanese coat, said his plans to rein in the country's crushing public debt, privatize government agencies and dismantle regulatory barriers to competition were on schedule.

Those changes, along with a planned tax-system overhaul this year, are vital if the economy is to recover from its third recession in a decade, he added.

"Many people have high hopes for our reforms. We've taken that to heart, and this year we plan to sprint ahead with even more reforms," said Mr. Koizumi, who has shaken the Japanese political scene since taking office in April with promises of major reform and an end to backroom politics and pork-barrel spending.

Last month, his Cabinet agreed to revamp the public sector and lighten the government's financial burden by abolishing 19 state corporations and privatizing 45 others, including highway corporations and airports.

But some have criticized his policies as proceeding too slowly and threatening an already-sick economy.

Japan has been in a slump since the early 1990s. The nation's joblessness rate has risen to a record 5.5 percent and the government has revised its economic forecast downward, saying it now expects a 1 percent contraction this fiscal year.

Mr. Koizumi's agenda also has pitted him against conservative lawmakers in his own ruling Liberal Democratic Party, who view his policies as a threat to the special-interest groups that have kept the party in power for most of the past five decades.

Mr. Koizumi yesterday rejected criticism that factions within his party were opposed to change.

"The LDP has changed. It has gone from resistance to cooperation," he said.

The popular, long-maned prime minister said he would continue to prod banks to wipe clean their balance sheets of bad loans but he offered no specific deadline or targets.

Some have raised concerns that the changes could destabilize the banking industry. But Mr. Koizumi stressed that he would take decisive steps to head off any "unnecessary chaos" in the financial sector.

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