Japan must fund any additional spending plans within its budget rather than issuing more debt, the International Monetary Fund said on Friday, urging the government to get its fiscal house in order as the central bank starts to raise interest rates.
"Given the fact that monetary policy normalization is happening, it puts the onus on the fiscal side to actually embark on consolidation, which is, in my opinion, long overdue," Krishna Srinivasan, director of the IMF's Asia and Pacific Department, said in an interview.
Prime Minister Shigeru Ishiba has pledged to compile another large-scale spending package to cushion the blow to households from the rising cost of living. He has not commented yet on how the spending will be funded.
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