The International Monetary Fund on Monday made a fresh call on Japan's government to bring its flow of red ink under control, saying the central bank's monetary easing could backfire if investors believe it is "monetizing" the growing mountain of government debt, a step that often leads to financial turmoil.
The IMF has recently hardened its rhetoric toward Japan, suggesting the rest of the world is worried that Prime Minister Shinzo Abe's cabinet appears divided over whether to stick to a plan to raise its sales tax from next April. Raising government revenue is generally considered vital to reining in public debt, a danger spot for the Japanese and global economies.
"It has been—and remains—the IMF's view that it is critical to move ahead with the consumption tax increase as planned," Jerry Schiff, deputy director of the IMF's Asia and Pacific department, told The Wall Street Journal in an interview.
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