IMF Advises Japan to Avoid Broad Tax Cuts, Handouts

   Washington, July 24 (Jiji Press)--Japan should avoid broad tax cuts and cash handouts, as they could worsen the country's already precarious fiscal conditions, International Monetary Fund spokesperson Julie Kozack said Thursday.
   "Our advice to Japan is that, given this limited fiscal space, it's essential that...any fiscal response to shocks is both temporary and also targeted," Kozack told a regular press conference in Washington. "Generalized subsidies and tax cuts, in our view, should be avoided."
   The suggestion came after Sunday's election for the House of Councillors, the upper chamber of Japan's parliament, resulted in a disastrous loss for the ruling bloc, likely increasing pressure for greater fiscal spending.
   Tackling inflation was a major campaign issue in the Upper House race. The ruling Liberal Democratic Party and its junior coalition partner Komeito pledged to give cash handouts, while opposition parties called for reducing or abolishing consumption tax.
   Japan's long-term interest rates rose in interdealer trading after the election due to worries about fiscal expansion. Japan's outstanding debt is the highest among major economies, standing at more than double the country's gross domestic product.

(2025/07/25-09:49)

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