The International Monetary Fund said Friday that the Bank of Japan’s commitment to a 2 percent inflation target “could be achieved” if the government takes effective measures to bolster economic growth and restore its fiscal health, the worst among developed nations.
“Complementary growth strategies and fiscal reforms are . . . essential to raise inflation in a durable manner,” the Washington-based lender said in a concluding statement after its annual consultation mission to Japan.
“If these are successfully implemented, the mission estimates that the 2 percent inflation target could be achieved in the near to medium-term,” it said.
The IMF said the bank’s decision to drastically boost its purchases of financial assets is “an important step for raising growth and inflation,” adding that “we fully endorse the BOJ’s sweeping enhancements to its monetary policy framework.”
The IMF also said the 5 percent consumption tax should be doubled by 2015 as scheduled. Some analysts are skeptical whether Prime Minister Shinzo Abe’s administration, which has put emphasis on growth, will follow through on the increase.
On the growth strategy being prepared by the Abe administration, the IMF said, “To raise growth over the medium-term, structural reforms are critical.
“The government’s participation in the Trans-Pacific Partnership negotiations and its plans to raise the employment of women are important steps in this direction,” it said, adding deregulation in agriculture and domestic services is also necessary for future growth.