Abstract
Abenomics needs a significant policy upgrade to regain traction. Abenomics initially made good progress in revitalizing the economy, but the targets for growth, inflation, and the primary balance remain out of reach under current policies. Recognizing the risk of falling short, the authorities introduced a negative interest rate policy, delayed the planned consumption tax hike, and adopted additional structural reforms, but the outlook remains weak. Abenomics can still achieve its ambitious targets through a comprehensive and coordinated policy upgrade. In the absence of such a reload, policies and targets will need to be reset for more gradual and realistic progress to avoid adding to volatility and uncertainty.
Fund Relations
(As of June 30, 2016)
Membership Status: Joined: August 13, 1952; Article VIII
General Resources Account:
| SDR Million | Percent Quota | |
| Quota | 30,820.50 | 100.00 |
| IMF’s Holdings of Currency (Holdings Rate) | 27,111.45 | 87.97 |
| Reserve Tranche Position | 3,709.48 | 12.04 |
| Lending to the Fund New Arrangements to Borrow | 5,090.49 |
| SDR Million | Percent Quota | |
| Quota | 30,820.50 | 100.00 |
| IMF’s Holdings of Currency (Holdings Rate) | 27,111.45 | 87.97 |
| Reserve Tranche Position | 3,709.48 | 12.04 |
| Lending to the Fund New Arrangements to Borrow | 5,090.49 |
SDR Department:
| SDR Million | Percent Allocation | |
| Net cumulative allocation | 12,284.97 | 100.00 |
| Holdings | 12,387.16 | 100.83 |
| SDR Million | Percent Allocation | |
| Net cumulative allocation | 12,284.97 | 100.00 |
| Holdings | 12,387.16 | 100.83 |
Outstanding Purchases and Loans: None
Latest Financial Arrangements:
| Type | Date of Arrangement | Expiration Date | Amount Approved (SDR Millions | Amount Drawn (SDR Millions) |
| Stand-By | Mar 11, 1964 | Mar 10, 1965 | 305.00 | 0.00 |
| Stand-By | Jan 19, 1962 | Jan 18, 1963 | 305.00 | 0.00 |
| Type | Date of Arrangement | Expiration Date | Amount Approved (SDR Millions | Amount Drawn (SDR Millions) |
| Stand-By | Mar 11, 1964 | Mar 10, 1965 | 305.00 | 0.00 |
| Stand-By | Jan 19, 1962 | Jan 18, 1963 | 305.00 | 0.00 |
Overdue Obligations and Projected Payments to Fund1
(SDR Million; based on existing use of resources and present holdings of SDRs):
| Forthcoming | |||||
| 2016 | 2017 | 2018 | 2019 | 2020 | |
| Principal | |||||
| Charges/Interest | 0.43 | 0.43 | 0.43 | 0.43 | |
| Total | 0.43 | 0.43 | 0.43 | 0.43 | |
| Forthcoming | |||||
| 2016 | 2017 | 2018 | 2019 | 2020 | |
| Principal | |||||
| Charges/Interest | 0.43 | 0.43 | 0.43 | 0.43 | |
| Total | 0.43 | 0.43 | 0.43 | 0.43 | |
Exchange Arrangement:
Japan maintains a free floating exchange rate regime. Since the 2015 Article IV consultation, Japan has not had foreign exchange intervention. The ministry of finance publishes foreign exchange intervention information on its website. The exchange system is free of restrictions on the making of payments and transfers for current international transactions, with the exceptions of restrictions imposed solely for the preservation of national or international security that have been notified to the Fund pursuant to Executive Board Decision No. 144–(52/51).
Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Framework:
Japan underwent an assessment of its AML/CFT framework against the AML/CFT standard by the Financial Action Task Force (FATF) and the Asia/Pacific Group (APG) in 2008. Significant deficiencies were identified, notably with respect to customer due diligence (CDD) requirements, transparency of legal entities, the criminalization of terrorist financing and the freezing of terrorist assets. Since the 2014 Article IV mission, Japan has made significant progress in its commitment to strengthening its AML/CFT legal framework through the FATF standards, notably by enacting the Amendment Act on Prevention of Transfer of Criminal Proceeds, the Act to Amend the Terrorism Financing Act, and the Terrorist Assets Freezing Act. Japan will continue to be monitored by the FATF on its progress including the issuance of subsidiary legislations to implement the enacted Acts.
Article IV Consultation:
The 2015 Article IV consultation discussions were held during May 8–21, 2015; the Executive Board discussed the Staff Report (IMF Country Report No. 15/197) and concluded the consultation on July 17, 2015. The concluding statement, staff report, staff supplement, selected issues paper, and PIN were all published.
Statistical Issues
Economic and financial data provided to the Fund are considered adequate for surveillance purposes. Japan subscribes to the Special Data Dissemination Standard (SDDS) and meets the SDDS specifications for the coverage, periodicity, and timeliness of data. The Japanese authorities hosted a data module mission for a Report on the Observance of Standards and Codes (data ROSC) in September 12–28, 2005. The Report on Observance of Standards and Codes - Data Module, Response by the Authorities, and Detailed Assessments Using the Data Quality Assessment Framework (DQAF) were published March 17, 2006 and are available at http://www.imf.org/external/pubs/ft/scr/2006/cr06115.pdf.
Japan: Table of Common Indicators Required for Surveillance (as of June 20, 2016)
Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.
Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.
Foreign, domestic bank, and domestic nonbank financing.
The general government consists of the central government (budgetary funds and extra budgetary funds), local governments, and social security funds.
Including currency and maturity composition.
Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).
Reflects the assessment provided in the data ROSC or the Substantive Update (published on May 17, 2006, and based on the findings of the mission that took place during September 2005) for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O); largely observed (LO); largely not observed (LNO); not observed (NO); and not available (NA).
Same as footnote 7, except referring to international standards concerning (respectively) source data and its assessment, statistical techniques, assessment and validation of intermediate data and statistical outputs, and revision studies.
Japan: Table of Common Indicators Required for Surveillance (as of June 20, 2016)
| Date of Latest Observation | Date Received | Frequency of Data6 | Frequency of Reporting6 | Frequency of Publication6 | Memo Items: | ||
| Data Quality – Methodological soundness7 | Data Quality – Accuracy and reliability8 | ||||||
| Exchange Rates | June 2016 | June 2016 | D | D | D | ||
| International Reserve Assets and Reserve Liabilities of the Monetary Authorities1 | 6/10/2016 | 6/14/2016 | Every 10 days | Every 10 days | Every 10 days | ||
| Reserve/Base Money | May 2016 | June 2016 | M | M | M | ||
| Broad Money | May 2016 | June 2016 | M | M | M | LO, LO, LO, LO | O, O, O, O, O |
| International Investment Position | 2016Q1 | June 2016 | Q | Q | Q | ||
| Central Bank Balance Sheet | 6/10/2016 | 6/14/2016 | Every 10 days | Every 10 days | Every 10 days | ||
| Consolidated Balance Sheet of the Banking System | April 2016 | June 2016 | M | M | M | ||
| Interest Rates2 | June 2016 | June 2016 | D | D | D | ||
| Consumer Price Index | April 2016 | May 2016 | M | M | M | O, LO, O, O | O, O, LO, O, O |
| Revenue, Expenditure, Balance and Composition of Financing3 – General Government4 | 2014 | January 2016 | A | A | A | O, LNO, O, O | LO, O, O, O, LO |
| Revenue, Expenditure, Balance and Composition of Financing3 – Central Government | 2014 | January 2016 | A | A | A | ||
| Stocks of Central Government and Central Government-Guaranteed Debt5 |
2016Q1 | May 2016 | Q | Q | Q | ||
| External Current Account Balance | April 2016 | June 2016 | M | M | M | O, O, LO, O | LO, O, O, O, O |
| Exports and Imports of Goods and Services | April 2016 | June 2016 | M | M | M | ||
| GDP/GNP | 2016Q1 | June 2016 | Q | Q | Q | O, O, O, O, | LO, LO, O, O, LNO |
| Gross External Debt | 2016Q1 | June 2016 | Q | Q | Q | ||
Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.
Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.
Foreign, domestic bank, and domestic nonbank financing.
The general government consists of the central government (budgetary funds and extra budgetary funds), local governments, and social security funds.
Including currency and maturity composition.
Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).
Reflects the assessment provided in the data ROSC or the Substantive Update (published on May 17, 2006, and based on the findings of the mission that took place during September 2005) for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O); largely observed (LO); largely not observed (LNO); not observed (NO); and not available (NA).
Same as footnote 7, except referring to international standards concerning (respectively) source data and its assessment, statistical techniques, assessment and validation of intermediate data and statistical outputs, and revision studies.
Japan: Table of Common Indicators Required for Surveillance (as of June 20, 2016)
| Date of Latest Observation | Date Received | Frequency of Data6 | Frequency of Reporting6 | Frequency of Publication6 | Memo Items: | ||
| Data Quality – Methodological soundness7 | Data Quality – Accuracy and reliability8 | ||||||
| Exchange Rates | June 2016 | June 2016 | D | D | D | ||
| International Reserve Assets and Reserve Liabilities of the Monetary Authorities1 | 6/10/2016 | 6/14/2016 | Every 10 days | Every 10 days | Every 10 days | ||
| Reserve/Base Money | May 2016 | June 2016 | M | M | M | ||
| Broad Money | May 2016 | June 2016 | M | M | M | LO, LO, LO, LO | O, O, O, O, O |
| International Investment Position | 2016Q1 | June 2016 | Q | Q | Q | ||
| Central Bank Balance Sheet | 6/10/2016 | 6/14/2016 | Every 10 days | Every 10 days | Every 10 days | ||
| Consolidated Balance Sheet of the Banking System | April 2016 | June 2016 | M | M | M | ||
| Interest Rates2 | June 2016 | June 2016 | D | D | D | ||
| Consumer Price Index | April 2016 | May 2016 | M | M | M | O, LO, O, O | O, O, LO, O, O |
| Revenue, Expenditure, Balance and Composition of Financing3 – General Government4 | 2014 | January 2016 | A | A | A | O, LNO, O, O | LO, O, O, O, LO |
| Revenue, Expenditure, Balance and Composition of Financing3 – Central Government | 2014 | January 2016 | A | A | A | ||
| Stocks of Central Government and Central Government-Guaranteed Debt5 |
2016Q1 | May 2016 | Q | Q | Q | ||
| External Current Account Balance | April 2016 | June 2016 | M | M | M | O, O, LO, O | LO, O, O, O, O |
| Exports and Imports of Goods and Services | April 2016 | June 2016 | M | M | M | ||
| GDP/GNP | 2016Q1 | June 2016 | Q | Q | Q | O, O, O, O, | LO, LO, O, O, LNO |
| Gross External Debt | 2016Q1 | June 2016 | Q | Q | Q | ||
Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.
Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.
Foreign, domestic bank, and domestic nonbank financing.
The general government consists of the central government (budgetary funds and extra budgetary funds), local governments, and social security funds.
Including currency and maturity composition.
Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).
Reflects the assessment provided in the data ROSC or the Substantive Update (published on May 17, 2006, and based on the findings of the mission that took place during September 2005) for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O); largely observed (LO); largely not observed (LNO); not observed (NO); and not available (NA).
Same as footnote 7, except referring to international standards concerning (respectively) source data and its assessment, statistical techniques, assessment and validation of intermediate data and statistical outputs, and revision studies.
When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.