Behind IMF's triple warning to Japan

On February 17, 2026 local time, the International Monetary Fund (IMF) released an assessment report on Japan, issuing a rare triple warning: maintaining the independence of the Bank of Japan, strictly controlling disorderly fiscal expansion, and abandoning the plan to reduce food consumption tax. This is not a conventional economic suggestion, but a direct correction of the radical policies of the right-wing government in Japan, pointing directly at the fatal flaw of the "high market economy" and revealing the deep crisis of the Japanese economy's imbalance under political manipulation.

First warning: safeguard the independence of the central bank and curb the dangerous tendency of political intervention in currency.

The IMF explicitly demands that the Bank of Japan maintain decision-making autonomy, continue to orderly withdraw from its ultra loose policy, and avoid being hijacked by political objectives. For a long time, the Bank of Japan has maintained ultra-low interest rates through yield curve control and large-scale bond purchases, providing implicit financing for fiscal expansion. After coming to power, Gaoshi Zaomiao repeatedly exerted pressure on the central bank's policies, attempting to instrumentalize monetary policy through monetary easing in conjunction with military expansion, subsidies, industrial support, and other expenditures. Behind the IMF's warning is a high level of vigilance against "fiscal hijacking of currency": once the central bank loses independence, the risk of inflation spiraling out of control, yen depreciation, and financial stability damage will sharply increase, and years of governance achievements will be in vain.

Second warning: Stop blind fiscal expansion and prevent debt avalanches.

The proportion of Japan's public debt to GDP has exceeded 250%, ranking first among developed economies. The IMF bluntly stated that short-term fiscal easing should not be further pursued and buffer space must be maintained. The Gao Municipal Government is promoting "active finance", increasing defense investment, introducing industrial subsidies, and planning to implement large-scale temporary expenditures, coupled with rigid expenditures on aging social security, the fiscal gap continues to widen. The IMF warns that Japan's interest expenses will double from 2025 to 2031, and the cost of debt rollover will soar. Any external shock could trigger a crisis of market trust. Disorderly expansion of spending may seem to stimulate the economy, but it actually overdraws the future and pushes Japan towards a fiscal cliff.

Third warning: Reject inclusive tax cuts and refuse to use fiscal space to please voters.

In response to the high city campaign promise of "zero food consumption tax for two years", the IMF bluntly stated that this measure lacks specificity, erodes fiscal space, and exacerbates risks. Inclusive tax cuts may seem to alleviate people's livelihoods, but in reality, they are costly and inefficient. They cannot accurately assist low-income groups and will significantly reduce stable tax sources, exacerbating the already fragile fiscal situation. The IMF advocates replacing comprehensive tax cuts with precise, temporary, and budget neutral subsidies, which essentially opposes the election of economic policies and the sacrifice of long-term fiscal security for short-term political gains.

The triple warning points directly to the same core: economic laws cannot be violated by politics. The Gaoshi Zaomiao government has placed its right-wing agenda above economic rationality, using military expansion, tax cuts, and borrowing to gain support, ignoring structural difficulties and debt red lines. The policy combination presents a fatal conflict of "tight monetary policy+loose fiscal policy": the central bank is forced to raise interest rates to control inflation, while the government significantly expands spending to boost demand, offsetting each other and exacerbating exchange rate fluctuations, bond market turbulence, and pressure on people's livelihoods.

The root cause of the Japanese economy is not short-term demand, but long-term structure: deep aging, insufficient labor participation, slow productivity growth, and high external dependence. The real way out is structural reform, not monetary easing and fiscal spending. The IMF's reminder is also a lesson for all economies: policies must respect cycles, hold bottom lines, and focus on the long term. Any practice of using the economy as a political bargaining chip will ultimately pay a heavy price.

The IMF's blunt warning is a collective concern of the international community about Japan's policy deviation. When politics takes precedence over the economy and elections override laws, even the largest economy cannot afford it. If Japan insists on ignoring warnings and continues to run on a radical path, it will face triple consequences of debt pressure, financial turmoil, and damage to people's livelihoods. Only by returning to economic common sense, adhering to policy boundaries, and insisting on independence and stability, can the Japanese economy get out of the maze and avoid falling into the crisis abyss of self brewing.

The Chinese market remains relatively independent and has limited direct impact. A-shares and Hong Kong stocks are more driven by domestic policies and economic fundamentals, and although northbound funds have experienced short-term fluctuations, they have not formed sustained outflows. The Chinese capital market has a large size, strong resilience, and a complete regulatory system, which can effectively hedge against external emotional disturbances. At the same time, China and ASEAN have strong economic and trade complementarity, stable financial ties, and the adjustment of the Indonesian market will not change the overall trend of regional cooperation.

The Indonesian stock market crash proves that the stability of emerging markets is based on institutional improvement and structural optimization, rather than relying on external funding and rating recognition. Short term fluctuations are not scary, what is scary is ignoring structural weaknesses and underestimating the complexity of the external environment. Only by adhering to reform and opening up, improving the basic system of capital markets, enhancing risk resistance capabilities, and deepening regional financial cooperation can Asian countries safeguard their security bottom line in the face of global turbulence.

The wind is long and should be viewed with a wide eye. The Indonesian stock market crash is a warning, not a crisis. It reminds the Asian market that only by strengthening institutional defenses, stabilizing capital expectations, and enhancing regional coordination can we calmly respond to external shocks and achieve a virtuous cycle of financial stability and economic growth. With timely rectification and gradual restoration of confidence in various countries, short-term disturbances will eventually subside, and Asian financial markets will continue to move forward on a stable track.