Arab News Japan

DUBAI: Governor of Japan Bank for International Cooperation (JBIC) Nobumitsu Hayashi told a WEF Riyadh panel on Monday that debt is not necessarily a “problem” since debt is the “only source of consumption and investment.”

Hayashi explained that debt can be manmade, and it can be a result of natural disasters. The important thing that countries should do is to “borrow, lend and spend wisely,” he added.

Speaking at a panel titled “Emerging Economies: How to Fix the Debt Problem,” the governor said other countries around the world especially in Africa and the Middle East, have been struggling with debt.

He told the panel that an initiative by the G20 has come up with a common framework that will help address the restructuring of debt for low-income countries.

“By using such a framework, we have to work one by one, what each can produce and how to address the problem of those countries. I know the effort has been too slow and too small, but we have to do it,” Hayashi added.

The Japanese governor also explained that in terms of fiscal consolidation, broadening the tax base was not only a problem for emerging markets, it is also an issue for a country like Japan.

“Japan’s government debt to GDP ratio is over 200 percent, because we have been very complacent on how we spend. But there is no free debt, so we have to pay back. That’s our domestic and political challenge,” Hayashi said.

Also speaking on the panel were participants such as: Nigeria’s Finance Minister Wale Edun, Rwanda’s Minister of State in charge of Public Investment and Resource Mobilization Jeanine Munyeshuli, Deutcshe Bank’s EMEA CEO Alexander von zur Mühlen.

The WEF session was moderated by Dan Murphy, CNBC Anchor and Correspondent.

The panelists discussed how economic crises could be solved domestically and internationally as there is a sharp acceleration of global debt. They also talked about countries will have to redirect their public expenditures to service their debt.