On August 8th, 2019, the International School Network visited the International Monetary Fund (IMF) Regional Office for Asia and the Pacific (OAP) in Tokyo, Japan.
Mr. Sumi introduced to us the three functions of the IMF OAP: lending, surveillance, and capacity development. Firstly, the IMF lends to its member countries at times of emergencies, such as when a country, for any reason such as overspending, is unable to pay back their loans. The IMF comes in to lend and correct policy patterns to bring back the order in the balance of payments. For instance, at the time of the Euro financial crisis, the withdrawal of bonds from Greece fueled by the Greek misrepresentation of management turned into a problem for the Euro. The IMF stepped in with their conditionality, or “belt-tightening” policies, to guide Greece away from the root of the problem. Mr. Sumi noted that these policies, which change previous habits and old ways, may be regarded as harsh and unpopular. Mr. Sumi used the analogy of the IMF being like a doctor- a doctor focuses on the long term health of the patient, so an unpleasant hospitalization may be forced to prevent an unfavorable lifestyle. For example, diabetes can be treated by hospitalization that forces patients to eat healthy foods instead of what the patient is used to and desires.
In addition, the IMF undergoes surveillance to look at the policies and its overall effects. The IMF publishes reports on the economic situations of countries, and most of them are disclosed. The IMF also undergoes capacity development so policy makers can gain knowledge to pay attention to the important indicators. For instance, the IMF OAP invites officials from 19 countries to get together for such training, paid by the Bank of Japan.
The significance of the IMF is its role in smooth money trade. Mr. Sumi pointed out that the flow of goods is handled by the WTO and GATS, and that both the money and goods flow make up multilateral trade. The IMF was established in 1944, after World War II, to prevent the economic reasons of the war: with shrunken trade and the increase of bloc economies, countries imposed tariffs and devalued their currency to save money but this in turn caused destabilization and less interdependence between countries. Henceforth, as WWII was coming to a close, the winning nations assured free trade and interdependence for a friendlier and richer global economy.
Mr. Sumi explained to us how Japan tends to be underrepresented in international organizations. The IMF has 2700 staff members but only 70 are from Japan. He hopes that more Japanese people can actively work in the IMF.
There tends to be few people in Japan who are qualified and willing to work in international organizations compared to other countries for various reasons. Firstly, in Western countries such as the US, working in international organizations is considered to be like a dream. However, in Japan, living standards are high and comfortable that many Japanese people tend not to find interest in working abroad. Moreover, most Japanese students do not continue their studies to the graduate school level, as Japanese companies employ undergraduate students. Therefore there are a lack of qualified people, and even those who are qualified have alternatives in the private sector where the initial pay is higher.
#5 Sustainability and inclusivity (Arisa)
#3 Overcoming differing points of view (Nanami)When countries face severe crises, they will usually turn to the IMF for assistance. In order to solve an occurring or impending crisis, the IMF suggests and implements several economic and sometimes political reforms that they believe to have been causing the crises. For this reason, the IMF is often a target of harsh criticisms from the citizens of the receiving countries because they are often mistaken as the force that had caused the drastic changes. In the process of improving financial situations, Mr. Sumi mentioned that he must face challenges of differing perspectives. He gave us an example of the Asian Financial Crisis of 1997. This crisis was a new type of shock characterized by the ever-growing power of the financial markets and increasing private investments that the world has not seen before. He says that the IMF was too slow to recognize that they were no longer the only institutions that were lending to countries, and that lending in the private sectors were growing rapidly. Transactions among private sectors and created a mismatch of conditionality with the IMF, and it aggravated the situation. To overcome these challenges, Mr. Sumi emphasized the importance of learning from their past mistakes and being more vigilant to financial volatility. He also stated that the citizens must be aware that the IMF’s sole purpose is to help countries get back on their feet. The general public tend to assume that IMF is the institution that causes the problems by imposing changes within their society. For example, when Japan and the IMF helped Korea back in 1997, the Korean people thought that the IMF created new issues because their reforms brought about unfamiliarity into their lives. In another explanation, Mr. Sumi mentioned how Indonesia had fought long to gain independence, and perceives the IMF as a western institution that intends to colonize and seize wealth. Over the years, however, public relations among Asian countries has been better, and economies are cooperating with each other. Mr. Sumi hopes to keep learning to ensure that the IMF executes its main purpose of helping countries in need.
Message to Students & Japan
Mr. Sumi noted that there are not many Japanese students who are studying abroad. Mr. Sumi hopes that despite the high life standards and comfort in Japan, more students will try to travel and look outside of the country for more experiences than what Japan can offer.
OAP in Japan and Mr. Sumi’s Ambition
As Japan is not a small country, Mr. Sumi believes that Japanese people must take the role as one of the leading economies of the world to learn more about other countries and express opinions more. Japan has recently been taking the role as the leader in various global issues such as climate change, breaching problems and connecting countries together as friends. However, because of the modest culture, many Japanese people still tend to be very shy about sharing their voice. Mr. Sumi noted that Japanese people should be prepared to share opinions when asked in a global environment, and these opinions do not necessarily have to stay fixed; people should listen attentively and form opinions which they can change at any time. This way, more Japanese people can participate and think about global issues.
The IMF OAP is stationed in Japan and has a significant role. The missions of the IMF Regional Office of Asia and Pacific include surveillance, as the annual reports and statistics published by the IMF are conveyed to the Asia and Pacific, and used and trusted by various entities such as Japanese companies. There are also seminars held to tell what is done in the headquarters, as a flow of information.
One thing that Mr. Sumi explained that he would like to increase the flow of information from Asia to the headquarters. Despite plenty of information flow from the headquarters to Asia and the Pacific, Mr. Sumi noted that there is not enough flow of information in the opposite direction. Especially because japan has knowledge of Asia, he wants to input this knowledge back to the headquarters through increasing meetings.
Another one of Mr. Sumi’s goals is to increase training opportunities. For instance, Mr. Sumi is now focusing on the Macroeconomist Training Program, which trains graduate (and undergraduate) students how the IMF looks at the economy, as a standard approach. He hopes to promote the profession of an economist as a career choice in international organizations- especially the field of macroeconomics.
On June 29th, 2015, the International School Network visited the International Monetary Fund (IMF) Regional Office for Asia and the Pacific (OAP) in Tokyo, Japan. There, we were able to listen to a presentation made by Deputy Head of Office and Regional Office for Asia and the Pacific, Ms. Yuko Kinoshita, and satisfy our burning curiosities regarding the IMF and the impact of their activities. At the IMF office, we were also able to have a brief encounter with Mr. Odd Per Brekk, the Director of the OAP.
Today, there is not a single time that the international organization, International Monetary Fund (IMF), is not related to the stories on the newspaper. The IMF is essential in the current world as a forum of discussion between various countries. With its headquarter in Washington D.C., USA, 188 countries participate in the IMF, with 2,500 staff members from over 160 countries. Different from the World Bank Group, which also locates its headquarters in Washington right next to IMF, IMF provides short time financing to help countries in economic difficulties while the World Bank provides long term loans to finance long-term projects of building roads in the aftermath of the Second World War and the Great Depression.
History of IMF
In the aftermath of the Second World War and the Great Depression, an international forum had become necessary for discussing economic monetary issues. In 1944, the international forum that will later be known as IMF was founded, supporting and promoting global economic and financial stability, stepping into economic problems such as inflation, deflation, shortages, and excess surpluses.
Structure of IMF
Three times a week 24 executive directors, representing countries or groups of countries from across the globe, sit together to make a decision on IMF recommendations.
There are four main roles the IMF plays.
The first mission is the surveillance of the economy of nations and currencies. The IMF sends it members to all of the 188 counties that are part of the IMF. It works – to check the inflation, financial institutions and the financial stability of that nation. Ms. Kinoshita has explained the IMF’s mission of surveillance with an analogy as a ‘health check of the economy’ of the country. The surveillance role of IMF works to check economic situations such as of the bank, inflations and deflations, and price stability.
The second and most prominent role of the IMF is acting as a lender in the global economy. The IMF lends money to countries that are in urgent need, working to help in short term financing. This sector keeps a pool of money for lending out to countries in urgent situations with, most importantly, speed. This includes times of supply-side shocks due to earthquakes and floods, or of reason of special procurements. When the root cause of the economic problem of a country is due to the continuous stance and approaches of the government, such as overspending or quantitative easing, the IMF makes conditions in effort to adjust the government to allow the financial help of the IMF to be used efficiently in a long run sustainable manner by the nation.
Thirdly, the IMF works to provide technical assistance to member countries. Experts of fields such as tax reform designing or those who are experienced in situations of inflation get in touch with governments to help and guide them. Different from lending role of the IMF, technical assistance helps countries to improve in matters that closely relate to everyday life.
Lastly, the IMF works as an architect of the world economy, to help with financial design in the economy. The organization gives suggestions of how financial sectors should be built in the aftermath of the crisis
Social Dimensions of IMF
IMF works to propose innovations for economic stability, especially to maintain stable economic growths so citizens can live happily over generations. There are several social dimensions that are intertwined affecting the world economies today. The IMF identifies the social dimensions of Social Spending, Health, Equality of Distribution, Employment, Jobs and Growth of Industries, Women Rights, and Climate Changes.
Women empowerment is an increasingly important issue in the Japanese economy as Prime Minister Abe is promoting the woman workforce and encouraging educated women to contribute to the economy. Ms. Kinoshita stated that in her study she especially noticed Scandinavian countries to have many women in the government and business today while there were only a few 30 to 40 years ago. She believes that Japan can learn from experiences of these countries. As a Japanese woman herself who had learnt English through self-taught studying and traveling, she aspires to see more Japanese women can contribute to economic activities.
Ms. Kinoshita’s Message
Ms. Yuko Kinoshita mentioned that ever since she was a little girl, she had had an interest in meeting with different people from different parts of the world. Therefore, she commented that she enjoys working in an international environment. Although she likes staying at her home country, Japan, in the future, she will possibly go back to Washington D.C. (where the headquarters of the IMF is located) to deal with global as well as regional issues there. Building up her career through IMF for roughly ten years, she had found pleasure being a spokesperson for Japan as well as for Asia. Despite the fact that the number is increasing, there are not many Japanese people working at the IMF. As the Deputy Head of Office and OAP, she wishes for more Japanese people to join. She thinks that it is important to have more Japanese people because currently, the Asian representation is smaller than other regions.. In order to keep precedence in international discussions and meetings, it is significant to in have more officers from Asia.
What interested Ms. Kinoshita most about the IMF was the global policy issues that she found was worth finding out more about. She found that it is exciting to be at the IMF as there is always something related to the IMF written of the newspapers every day. She finds that IMF can play a part in affecting the global economy. Thus, she thinks that it is very exciting to contribute to such a huge organization. The work itself is very appealing as she is able to constantly work with people from all over the world. In the sixth grade, as a future dream, she had written, “I want to be friends with people from all over the world”. She finds it fascinating that she had made her dream come true through working with the IMF. During her study at Waseda University, Ms. Kinoshita studied English on her own. She proved that it is indeed possible for anyone to work at an international environment if you have a strong will to achieve your goals. She mentioned that working with an international environment is a great opportunity to improve yourself. Looking at what nations do well and what they can improve on, it is a constant learning process.
When asked whether she had a message for readers of International School Network and the current Japanese students, she said, “Be ambitious, be global”. Ms. Kinoshita hopes for this message to be delivered to especially Japanese girls. She mentioned how many Japanese girls are very smart but tend to be quiet and shy because the society in many cases, tends to be dominated by men. Japanese girls are smart and capable and have so much potential. She feels that they can contribute more to the world and they should have more freedom of choice beyond the gender difference. However, she sees that the role of women have increased over time. She stated that the current Japanese students are role models for themselves and will become their own representatives. Lastly, Ms. Kinoshita added, “Don’t be afraid to make mistakes and try what you like.”
Madoka Nishina 11th Saint Maur International School
Kate Shimizu 11th Seisen International School
Kurumi Onishi 10th Saint Maur International School
Karen Nishina 5th Saint Maur International School