Public debt situation worries IMF


The International Monetary Fund expressed concern Thursday about the fiscal situation in Japan, where public debt keeps soaring.

Simulations by the IMF “suggest that global output losses could reach 2 percent of GDP” if Japan is “exposed to a reconsideration of sovereign risk by investors” and see long-term interest rates jump 2 percentage points, the IMF said in a report.

The international body called for a credible fiscal consolidation plan by Japan in the report on spillovers of domestic economic and monetary policies of major economies on the global economy.

Prime Minister Shinzo Abe’s three-pronged economic policy, dubbed “Abenomics,” is believed to have “positive, albeit small,” spillover effects on the global economy in the short term if all three arrows are successfully deployed, the report said.