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2026-02-18 08:15:48
[International Monetary Fund Warns Japan Against Lowering Consumption Tax, Says It Would Exacerbate Fiscal Risks] The International Monetary Fund (IMF), in a statement released Wednesday concluding its Article IV consultations with Japan, said the country should avoid lowering its consumption tax to prevent exacerbating fiscal risks. Japanese Prime Minister Sanae Takaichi is currently preparing to accelerate discussions on a possible suspension of the food consumption tax. The IMF stated, "Authorities should avoid lowering the consumption tax, as this non-targeted measure would erode fiscal space and exacerbate fiscal risks." The organization predicts that by 2031, interest payments on Japan's outstanding public debt will double compared to 2025, as maturing debt is refinanced at higher yields. The IMF warned, "High and persistent debt levels, coupled with a deteriorating fiscal balance, make the Japanese economy vulnerable to a range of shocks." The organization's forecast is consistent with the Japanese government's estimates.
