WASHINGTON šC International Monetary Fund executive Vitor Gaspar has recommended that Japan create longer-term fiscal plans amid increasing risks posed by interest rate rises.

¡°After the pandemic, interest rates have been rising, debts have been rising, (and) the pressure of interest payments on budgets is increasing,¡± Gaspar, director of the IMF¡¯s Fiscal Affairs Department, said in a recent interview.

The current debt trends and risks are ¡°fundamentally different¡± from those of the pre-pandemic period, when ultralow interest rates were the norm, he said.

In Japan, which accumulated debt under the ultralow interest rate environment, government debt has reached about 230% of gross domestic product, among the highest in the world.

As the inflation rate has exceeded the Bank of Japan¡¯s 2% target for three consecutive years, Gaspar said that the circumstances surrounding the country are ¡°very different from the circumstances that prevailed in Japan in the last decade.¡±

Given the country¡¯s declining and aging population, ¡°it¡¯s important for the Japanese authorities to tackle that new environment,¡± he said.

As public debts mount, Gaspar emphasized the need for countries around the world to reassess their fiscal policy management and promote more efficient government spending.

Regarding Japan, he proposed ¡°multiyear (fiscal) planning¡± that may extend over ¡°very long projection periods.¡±

In addition, ¡°one could try to improve the targeting of energy subsidies,¡± he said, encouraging Japan to concentrate such measures on low-income households and financially vulnerable businesses.

He also suggested that streamlining support for small and midsize enterprises ¡°could help make room for high-quality public investment spending.¡±

Gaspar, former Portuguese finance minister, will step down this month as director of the IMF department, a position he has held since 2014.