The International Monetary Fund has backed the recent efforts by Japanese government to boost the economy but said that the country needs to control its huge national debt.

IMF is expecting the Japanese economy to grow at 1.6 per cent this year. The IMF said that the Prime Minister Shinzo Abe and his government are on the right track to reverse falling prices and boost the growth in the Japanese economy.

“The new policy framework provides a unique opportunity to end decades-long deflation and sluggish growth, and reverse the rise of public debt. The rewards are potentially large,” the IMF said in an annual country report that was released on Friday. It also said that there are strong risks to the outlook. The IMF said that the growth without private investment and employment growth could affect the recovery of the Japanese economy.

The IMF also said that controlling the country’s national debt, which is now the highest among the developed nations and planned doubling of the nation's sales tax to 10 per cent by 2015 are crucial for the country’s financial recovery. The policies of Prime Minister Shinzo Abe are most likely to boost business confidence and encourage capital spending in the country. Mr. Abe has been suggesting more aggressive monetary easing, higher stimulus spending and faster economic reforms.