(provisional translation)

(OPENING STATEMENT)

Today the 142nd session of the Diet came to a close. In my opening statement, I would like to refer to the tasks ahead by reflecting on the accomplishments of this session.

Firstly, intense deliberations were held in both Houses on the FY1997 supplementary budget, the FY1998 annual and supplementary budgets, as well as the many bills and treaties proposed by the Government. As a result, all four budgets including the (FY1998) provisional budget, were approved, 97 bills were passed and 18 treaties were approved. I would like to take this occasion to express my sincere gratitude to all of the members of both Houses and to all the others who made this possible. Concerning the bills which are important but were not passed during this Diet session, such as the bill on information disclosure, the bill related to the Guidelines for Japan-U.S. Defense Cooperation and the bill on the settlement of the debts owed by the former Japanese National Railways, I would like to reiterate my request for their passage at the earliest possible occasion in the future. I also hope for the early passage of the political reform bills and the national civil servants ethics bill and other legislation submitted by Diet members.

Each of the budgets approved during this session of the Diet contains elements which are absolutely necessary for the Japanese economy. In particular, the FY1998 supplementary budget which was approved yesterday includes social infrastructure development amounting to 7.7 trillion yen and special tax reduction. These are strong measures to achieve the expansion of domestic demand necessary for the recovery of our economy. Another major feature of the supplementary budget is the clear priority boldly placed on projects that are truly necessary for both current and future generations, such as: (a) measures to counter dioxins and environmental hormones, concerns close to the lives of the Japanese people; (b) welfare, medical care and education, in response to the decreasing birthrate and aging population; and (c) investment in telecommunications networks and science and technology.

I would say that at present there is an excessive loss of self-confidence in Japan. We face a very severe situation marked by a weakening yen, sluggish stock prices and a rising unemployment rate. However, it is also true that Japan has many irreplaceable strengths: one of the highest education standards in the world, an extremely diligent work ethic, outstanding capacity for technological development and great capital resources. I believe the prompt and steady implementation of the annual and supplementary budgets, combined with the implementation of measures to resolve the issue of non-performing loans which I will address later, will enable Japan to tap its potential strengths fully and restore vigorous economic growth pulled by the people and private enterprises.

In response to the sudden economic changes both in Japan and abroad since last autumn, including the financial and economic crises in Asia and the collapse of major financial institutions in Japan, I have thoroughly considered what is necessary for this country and decided to take firm measures for a strong Japanese economy and Asian economy. In order to rebuild and revitalize Japan's economy, which is in a serious condition, I intend to make my utmost efforts to stabilize the financial system by resolving the issue of non-performing loans to achieve economic growth led by domestic demand, to open markets and to promote deregulation. With these in mind, I talked to President Clinton on the phone yesterday. We agreed that it was good to be able to cooperate in exchange markets to support a stable yen.

In the future, I intend to take every possible measure to bolster the strength of the Japanese economy while carefully monitoring the economic situation at hand.

On this very occasion last year, I stated that the regular Diet session which had just concluded was the point of departure for the Six Reforms. If I can express myself in the same way today, I would say that the wheels of each reform turned steadily during this past Diet session.

On administrative reform, for example, the establishment of the Basic Law on Central Government Reform marks a major advance. This law sets up a new basic framework for ministries and agencies. Now, aiming at a transition to the new structure in January 2001, the Central Government Reform Promotion Headquarters to be established on 23 June will play a central role not only in realizing the basic concept of administrative reform, which calls for a shift from government to private sector and from central government to local governments, but also in advancing a new streamlined administrative structure.

Of course, these changes will be promoted on the basis of the previously announced Three-year Deregulation Promotion Plan and the previously drafted Decentralization Promotion Plan, as well as any opinion which may be put forward by the Decentralization Promotion Committee in the future.

In doing so, I intend to show strong leadership and to fully utilize the third-party advisory council which I supervise directly to ensure that there will be no allegation that such activities were initiated by the bureaucracy.

Regarding fiscal structural reform, as I have said repeatedly, the need for it in the long run has not changed. We must not forget the opinions of the younger generation which want us to rebuild the fiscal structure. At the same time, to take the necessary measures for economic recovery - the first and foremost challenge facing us - we have made the necessary revisions to the Fiscal Structural Reform Law during this session of the Diet while maintaining the basic framework of the Act. I firmly believe that this decision will gain the support of the Japanese people, as a response to the very difficult task of writing an appropriate prescription to cope with issues over both the short-term and the medium- to long-term.

In response to issues involving the financial system, we established both legal and budgetary measures to stabilize this system at the start of the Diet session, while approving the Financial System Reform Bill for the development of markets and systems which are both easily accessible and trustworthy. I believe these measures will help to restore the vitality of the financial systems which form the arteries of our economy and will bring about a recovery in the Japanese economy.

As for other efforts related to the so-called Six Major Reforms, significant progress was made in a variety of areas: for example, on economic reform, the abolishment of the Large-scale Retail Stores Law and its replacement by a new legal framework, revision of the Rationalization in Energy Use Law, and the enactment of the University Technology Transfer Promotion Law.

Important bills were passed in other areas of reform as well. On the reform of the social security system, the National Health Insurance Law, which incorporates a review of the medical insurance system, was amended. With regard to educational reform, the School Education Law was revised, introducing a system integrating junior and senior high schools and promoting diversification and flexibility in the school education system.

Based on this progress, we will continue to make active efforts toward reform and ask the Japanese people for their continued understanding and support.

As I have just said, steady forward progress is being made on each of the Six Major Reforms which I have promised. I believe the Japanese people will come to understand my political position and philosophy of implementing one-by-one everything that I have promised.

Now I would like to address several future tasks.

Firstly, we must take sweeping measures toward resolving the issue of non-performing loans held by our financial institutions, which is a major hindrance to economic recovery. Economic recovery and the settlement of non-performing loans are, in a sense, two wheels on the same axle. As I have just said, we are making every effort to achieve economic recovery. Now we are trying to establish an environment which will facilitate the settlement of bad loans. By establishing systems and structures to settle the relation between claims and liabilities related to bad loans secured by real estate as well as to promote the sale or securitization of such collateral real estate and non-performing loans, we can promote the liquidation of real estate and bonds.

I have already initiated concrete study of this issue on which the Cabinet is taking the lead. I will maintain cooperation with the political parties, even during the period of the upcoming election of the House of Councillors, and based on the results of our further discussions, will submit to the next session of the Diet the bills needed for the creation of the necessary legal framework.

Of course, in addition to these measures, it is also important to enforce greater market discipline in the management of these financial institutions through such means as further disclosure of information by financial institutions. Needless to say, we must ask these institutions to be strictly accountable in their management.

There is also a need to conduct a more thorough review of our tax system. Corporate taxes, both national and local, must be reduced to international levels at the earliest possible time within the next three years, namely without waiting for three years. As for income taxes, we must create a system that is both fair and highly transparent, and which will stimulate the Japanese people's motivation. I would like to promote in-depth discussion toward a radical review of both systems.

Economic recovery is our first and foremost task and to ensure that we are firmly on the way to such a recovery, we will make our utmost efforts to translate the policies above into action.

Today, I would like to take this opportunity to point out one additional issue. That is the issue of our decreasing birthrate. Needless to say, a government should not intervene in private matters such as marriage and childbirth. At the same time, Japan's birthrate is decreasing with a rapidity which is unprecedented and unparalleled anywhere in the world. If this trend continues, it is true that the population structure of Japan will change dramatically and exert a serious impact on our future socioeconomic situation. I proposed the Six Reforms aware of the need to face the realities of not only our aging population but also our decreasing birthrate.

Considering this situation, today I think it is extremely important for Japan to eliminate the various social and economic factors that interfere with childbirth and child rearing, and to build homes, communities and workplaces where both old and young, men and women can build homes, communities and workplaces with which they can be happy. On this point, I hope the Japanese people begin to engage in truly active debate. I also want the government to be aware of the situation I have just described and to think sincerely about what it can do and what it should accomplish.

Now let me turn your attention to the international community. Last month India conducted nuclear tests, followed by Pakistan. This is truly deplorable, since these acts go against the efforts of the international community towards a world free of nuclear weapons. Japan took resolute measures against both India and Pakistan mainly in the areas of economic cooperation, and took initiative to discuss this issue at the Birmingham G8 Summit, the United Nations Security Council, G8 Foreign Ministers meeting and at other fora. Just the other day, Japan also announced the establishment of the Conference on Urgent Action for Nuclear Non-Proliferation and Disarmament. Within the next year, Japan will host several meetings of this forum in order to formulate proposals to the world on the maintenance and strengthening of the non-proliferation regime, the promotion of nuclear disarmament and on efforts toward the elimination of nuclear weapons. I hope this forum will produce good proposals for that purpose.

I would like to make further efforts toward nuclear disarmament and the abolishment of nuclear weapons. I feel strongly that this is a duty incumbent on Japan as the only nation to have experienced the devastation of a nuclear bombing.

I have been invited by Presidents Clinton and Chirac, and will visit them to hold a Japan-US Summit and a Japan-France Summit in July. I also plan to visit Russia this autumn. Visits by Presidents Jiang Zemin (of the People's Republic of China) and Kim Dae Jung (of the Republic of Korea) are also scheduled. During these talks, I would like to clearly explain Japan's position and discuss what should be accomplished through mutual cooperation based on the relations of trust I have cultivated with these leaders. At the same time, I would like to make every effort to build world peace and prosperity in the 21st century.

At the closing of this Diet session I have offered my frank impressions and shared some of my thoughts on future policy, although not all of these thoughts have taken concrete shape yet. Still I intend to bear in mind the various issues I have described, and vigorously make my utmost efforts by concentrating the knowledge and wisdom of the Japanese people. One by one, I hope to eliminate the concerns of the Japanese people.

I look to the good judgment of the Japanese people in the forthcoming House of Councillors election. I will be campaigning throughout the nation and will share my beliefs and thoughts with you, and ask for your kind attention. I also hope you will take a hard look at the long future that awaits Japan and share with me your own views on what should be done.

I sincerely look forward to meeting you. I would once again like to take the opportunity to thank the various parties, the Diet members of the various factions, and the people of Japan for their understanding and cooperation during this session.

Thank you for your attention.