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Originally published Tuesday, April 23, 2013 at 1:46 AM

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OECD welcomes Japan revival effort, warns on debt

A leading international economic group says Japan's efforts to end two decades of stagnation are welcome changes that could spark a recovery, but rising national debt threatens its long-term growth and financial stability.

The Associated Press

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TOKYO —

A leading international economic group says Japan's efforts to end two decades of stagnation are welcome changes that could spark a recovery, but rising national debt threatens its long-term growth and financial stability.

A report by the Organization for Economic Cooperation and Development said Tuesday that the success of Japan's strategy for breaking out of deflation and getting growth back on track remains uncertain.

It said that establishing fiscal health is Japan's "paramount policy challenge." The OECD noted potential risks from a rise in interest rates that could vastly increase the country's burden of servicing its debt. It said curbing that problem could worsen poverty.

Ratings company Standard & Poors said in a separate report that Japan's plan to raise its sales tax was necessary but could threaten its recovery.

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