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OECD's Gurria urges G7 to coordinate fiscal spending boost
[TOKYO] OECD Secretary-General Angel Gurria pressed on Wednesday for the Group of Seven rich countries to coordinate a a fiscal spending boost to bolster global growth.
He told Japan's Prime Minister Shinzo Abe that the fiscal spending did not need to be large, but should focus on infrastructure, education and policies that improve productivity, Gurria said after a meeting with Mr Abe.
The Japanese leader seemed to react favourably to his suggestions for more fiscal spending, Mr Gurria said, but it would take more discussions with other officials to set the G7 agenda.
Mr Abe is meeting with foreign economists to help him prepare to host a summit of G7 finance ministers and central bank governors in May.
Mr Gurria said he advised Mr Abe that Japan should stick with its plan to raise its sales tax next year and raise it further to pare public debt.
However, major economies should shift away from fiscal austerity after years of disappointing growth.
"In 2008 and 2009 we were calling for fiscal consolidation, but now is different," Mr Gurria said. "Governments can carefully choose spending projects with high multipliers. Governments can also borrow at low rates and spend on projects that break bottlenecks." Earlier this year the Group of 20 called for more fiscal spending and less reliance on monetary policy due to frustration that the global economy has not been able to break out of an environment of low growth.
Mr Abe is scheduled to raise a national sales tax to 10 per cent from 8 per cent in April next year, but some of Abe's closest advisers are calling for the plan to be shelved.
Mr Gurria reiterated his view that the government should stick with this plan and raise the sales tax gradually to 15 per cent to help stabilise public debt.
Mr Gurria's views are in contrast to Nobel laureates Paul Krugman and Joseph Stiglitz, who met with Abe last month and recommended delaying the tax hike.