IMF calls on Japan to provide sounder plan to reduce debt | Business| Economy and finance news from a German perspective | DW | 05.08.2013
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IMF calls on Japan to provide sounder plan to reduce debt

The International Monetary Fund has said Japan has made commendable efforts to leave a stagnant economy behind. But its latest report revealed massive concerns about Tokyo's ability to reduce debt.

In a report issued by the IMF on Monday, Japan was lauded for its policies aimed at boosting sluggish domestic growth. It said the near-term outlook for the world's third-biggest economy had improved considerably thanks to monetary easing and increased government spending under Prime Minister Shinzo Abe.

But the report also warned those policies, which have come to be known as Abenomics, also had many risks if not accompanied by sustainable structural reforms.

While forecasting 2 percent growth for the Japanese economy throughout this year because of stronger demand at home and overseas, the study predicted consumers would most likely have to tighten their belts in the following year, with a rise in sales tax likely to start biting.

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The IMF urged Tokyo to make significant adjustments to help bring down the nation's public debt, which would amount to no less than 250 percent of gross domestic product (GDP) at the end of 2013.

"The growth outlook is subject to significant risks, primarily stemming from incomplete domestic reforms and a weaker external environment," the lender commented.

The IMF recommended that Japan bring more women into the workforce, relax immigration restrictions and open markets to more trade through participation in the US-led talks on the Transatlantic Partnership regional bloc.

The Washington-based fund also dealt with Europe's fledgling recovery, praising several nations for their recent reform endeavors. In the case of France, it even called for slowing down budget consolidation so as not to stifle growth in the country.

hg/dr (dpa, AP, AFP)

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