IMF Spokesperson Welcomes Japan’s Draft Extra Budget

Washington, Dec. 4 (Jiji Press)–A spokesperson at the International Monetary Fund on Thursday commended Japan’s draft supplementary budget for fiscal 2025. “We are encouraged to see that some of the more fiscally burdensome proposals that had been discussed” are not included in the extra budget plan, Julie Kozack said at a regular news conference. Japan’s key long-term interest rate, measured by the yield on the most recent issue of 10-year Japanese government bonds, is going up due to concerns among financial market players over the country’s fiscal health following the compilation of the draft add-on budget by the administration of Prime Minister Sanae Takaichi last month. Kozack said, however, the IMF thinks that the overall size of the draft budget is “smaller than what market analysts had been expecting.” Therefore, the organization believes that “the impact of the fiscal package on next year’s fiscal deficit will be a bit smaller than the announced size,” she added. Backed by strong economic growth, the ratio of Japan’s debt to its gross domestic product “will be on a declining path next year,” Kozack said. At the same time, she warned that “Japan does face some longer-term spending pressures,” including from higher interest rates, the aging of society and the country’s plan to strengthen its defense capabilities. Kozack noted that the Bank of Japan’s monetary policy “does still remain appropriately accommodative,” indicating that the central bank has room for raising its policy interest rate. Still, she said the BOJ needs to “continue its flexible and data-dependent approach,” noting that Japan, like many other countries, remains in an environment of “high uncertainty.” BOJ Governor Kazuo Ueda has said the central bank will decide appropriately whether to raise interest rates at its next monetary policy meeting Dec. 18-19. END [Copyright The Jiji Press, Ltd.]