Japan must act immediately to improve its fiscal health as the risks of natural disasters mount and social security costs continue to increase, according to the International Monetary Fund.
"There is limited space today in Japan to address shocks,” warned Nada Choueiri, the IMF’s Japan mission chief in an interview in Tokyo on Thursday. "Japan needs to plan today for where to find the space to accommodate” fiscal spending needs without increasing its deficits, she added.
The IMF’s warning comes as Japan ramps up spending to address a broad spectrum of needs ranging from bolstering national defense to efforts to raise the birth rate. That’s happening just as its financing costs are inching higher as a result of the Bank of Japan’s rate hikes over the last year. Japan already has the largest public debt burden among developed nations.
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