SEOUL, South Korea, July 9 - A senior official for the International Monetary Fund warned today that the structural reforms demanded by Prime Minister Junichiro Koizumi of Japan could undermine long-term regional efforts to recover from the economic crisis of 1997 and 1998.
Stanley Fischer, the second-highest official at the fund, said Mr. Koizumi's proposals for cutting public works and shutting down financially weak banks and companies might "deal with the problems in the short run" but they risk adding to the problems of a region already hurting from economic problems in the West as well as Japan.
As Asian countries teetered on the edge of a new economic slump caused by declining stock markets and faltering exports, Mr. Fischer said in an interview that "the role of the Japanese economy in this region should not be underestimated."
The Japanese, he said, "should be out there running a more expansionary policy" to soften the impact of the cutbacks in public spending and massive credit that are the cornerstone of Mr. Koizumi's program.
"With Japan weak, with export markets weak, it's very hard for the countries that were in crisis four years ago," said Mr. Fischer, who as the fund's first deputy managing director has been responsible for many of the programs that braced up Asian economies.
"It's going to be a tough time before export markets turn around," he said, citing the weak market for semiconductors as one factor. "Semiconductors affect East Asia very badly."
Mr. Fischer, visiting Korea today and Japan tomorrow on his last look at the region before he leaves the I.M.F. in September, discussed Korea's problems as high-tech stocks continued an alarming decline.
In Tokyo, Kyocera, the largest company on the Nikkei, declined 2.7 percent, helping to drive the exchange down half a percent to 12,239.68, its lowest closing since March 19. In Seoul, Samsung Electronics, Korea's largest electronics firm, fell 3.5 percent, while the Korea composite index declined 3.2 percent to 560.00.
Although chronic slow growth in Japan and a declining stock market in the United States were partly to blame for market troubles here and in other Asian countries, Mr. Fischer berated Korea for prolonging its own difficulties by providing easy credit for companies that should either merge with competitors or go out of business.
"I'm really worried about aspects of what Korea is doing," he said. "They've got to get themselves out of the financial sector. They've got to stop guaranteeing things front, right and center."
Mr. Fischer declined to cite specific examples, but others have criticized government support for such troubled giants as Hyundai Engineering and Construction, part of the Hyundai Group, and Hynix Semiconductor, both of which are saddled with several billion dollars in loans maturing this year.
Mr. Fischer also criticized government ownership of banks, some of which have taken over companies unable to pay their debts. He said he hoped the government would soon sell SeoulBank, which it has repeatedly supported with public financing to cover its debts.
Mr. Fischer, who coordinated the fund's negotiations with Korea, rated Malaysia as second to Korea in carrying out reforms but said Thailand had "begun to run out of steam," the Philippines "has some tough going with uncertainties" and Indonesia needed "strong political leadership" to realize its potential.