Japan’s government must push through reforms to restore the country’s tattered finances to help ensure a sustained economic recovery, a central bank board member said on Monday, adding a planned sales tax hike was needed to control huge public debt.
Takehiro Sato also said the central bank would inject more stimulus if Japan’s recovery was threatened, pointing to risks such as slowing growth in China and other emerging nations.
“A high degree of uncertainty remains concerning the global economy, and I see risks to the economic outlook as somewhat tilted to the downside,” he told business leaders in Fukushima, northeastern Japan.
Prime Minister Shinzo Abe has been non-committal on whether he will go ahead with a scheduled increase in the sales tax rate to 8 percent from 5 percent next April, the first stage in a planned doubling of the levy, due to concerns it could weaken the economy.
Sato, an economist who joined the BOJ board last year, said the tax hike was a key step to rein in Japan’s public debt, which is now the largest among major industrialized nations after years of fiscal spending to try to jump-start the stagnant economy.