THE INTERNATIONAL MONETARY Fund has expressed concern over the level of Japan’s debt, which it says could “quickly become unsustainable.
The IMF fears that the country’s government bond yields may rise, rendering Japan’s debt unsustainable and causing the effects to ripple through the global economy. “Recent events in other advanced economies have underscored how quickly market sentiment toward sovereigns with unsustainable fiscal imbalances can shift,” the report pointed out.
The IMF’s Sustainability Report highlights that Japan’s public liabilities count for about twice the country’s economic output each year – a figure that is worse than industrialised countries recognised to be in serious trouble such as Spain and Italy, reports the Wall Street Journal.
The fund said that Japan needed a “more ambitious” fiscal reform plan in order to maintain market confidence.