Japan must do more to shrink its massive public debt, the International Monetary Fund said Wednesday, but added that the nation's disaster-hit economy was recovering well despite turmoil overseas.
The Washington-based IMF "welcomed" Tokyo's plan to double the country's sales tax to 10 percent by 2015, a deeply unpopular move that the government said was crucial to put Japan's fiscal house in order.
The legislation has passed the lower house of parliament but it remained unclear whether it would get a stamp of approval in the upper house before becoming law.
"Reducing the public debt burden is a key policy priority and requires sustained fiscal consolidation over the next decade," the IMF said in its annual report on the world's third-largest economy issued Wednesday.
"Additional fiscal consolidation measures, designed so as to limit any adverse impact on growth, would be needed beyond 2015 to put the public debt ratio firmly on a downward path."
Japan is grappling with a debt that stands at more than double gross domestic product, the highest ratio in the industrialised world, and it is poised to grow as a rapidly ageing population turns to public pensions.
Most of the nation's debt is held domestically, allowing Tokyo to escape much of the criticism that has befallen eurozone countries, including Greece.
"Given the rapidly ageing population, policies aimed at increasing employment of women and older workers and facilitating immigration could have a large payoff," the IMF report said.
The report also called for pension reform, boosting productivity by easing regulations in the agricultural and service sectors, and "participation in additional free trade agreements", it said.
The report said the Japanese economy had "shown remarkable resilience and adaptability" in the aftermath of last year's quake-tsunami disaster.
But its recovery could be hamstrung by "the possibility of a further escalation of the crisis in Europe and a sharper than expected slowing of the Chinese economy", the report said.
yahoo.com
The Washington-based IMF "welcomed" Tokyo's plan to double the country's sales tax to 10 percent by 2015, a deeply unpopular move that the government said was crucial to put Japan's fiscal house in order.
The legislation has passed the lower house of parliament but it remained unclear whether it would get a stamp of approval in the upper house before becoming law.
"Reducing the public debt burden is a key policy priority and requires sustained fiscal consolidation over the next decade," the IMF said in its annual report on the world's third-largest economy issued Wednesday.
"Additional fiscal consolidation measures, designed so as to limit any adverse impact on growth, would be needed beyond 2015 to put the public debt ratio firmly on a downward path."
Japan is grappling with a debt that stands at more than double gross domestic product, the highest ratio in the industrialised world, and it is poised to grow as a rapidly ageing population turns to public pensions.
Most of the nation's debt is held domestically, allowing Tokyo to escape much of the criticism that has befallen eurozone countries, including Greece.
"Given the rapidly ageing population, policies aimed at increasing employment of women and older workers and facilitating immigration could have a large payoff," the IMF report said.
The report also called for pension reform, boosting productivity by easing regulations in the agricultural and service sectors, and "participation in additional free trade agreements", it said.
The report said the Japanese economy had "shown remarkable resilience and adaptability" in the aftermath of last year's quake-tsunami disaster.
But its recovery could be hamstrung by "the possibility of a further escalation of the crisis in Europe and a sharper than expected slowing of the Chinese economy", the report said.
yahoo.com
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