Hayami repeats reform need for economic recovery

At a press conference Hayami noted that although Japan's monetary base, provided by the central bank, increased an average 7.9 pct annually from 1995 to 2000, commercial banks' lending fell 0.4 pct on average during the period and the nation's economic growth remained slow.

This has proved that the BOJ's credit easing alone was not enough in the past to jump-start the Japanese economy, Hayami said, adding that private-sector companies have failed to turn out competitive products in the meantime.

The new Japanese government of Prime Minister Junichiro Koizumi, who came to power in late April, is well aware of the past phenomenon and is ready to embark on full-fledged structural reforms, he said.

It is important to put into force one by one measures included in the government's reform-oriented economic package, which was adopted in early April, he said.

In line with the promotion of supply-side revamping, he underscored the need to implement reform steps to bolster consumers' demand such as the introduction of defined-contribution pension plans, the reform of health insurance systems and measures to create new jobs and spur job mobility.

The Japanese economy is certain to expand if drastic reform measures are taken, Hayami said.