Japanese Prime Minister Shinzo Abe has told legislators he has decided to delay a scheduled sales tax hike by two and a half years, putting his plans for fiscal reforms on the back burner amid more weakness in the economy.
The widely-anticipated delay will be welcomed by a majority of voters, who will cast ballots in an upper house election in July. But it is fanning doubts about Mr Abe's plans to curb Japan's huge public debt and fund ballooning social welfare costs of a fast-ageing population.
"I want to fulfil my responsibility by accelerating Abenomics more and more," Mr Abe told a gathering of his ruling Liberal Democratic Party on Wednesday.
"I have decided to delay the sales tax hike to 10 percent by two and half years."
It would be the second time that Abe has delayed the increase in the sales tax to 10 percent from 8 percent, after a rise from 5 percent in April 2014 tipped the economy back into recession.
Abe took office in December 2012 pledging to beat deflation and reboot the moribund economy with his "Abenomics" revival recipe, but has made little headway amid stubbornly weak domestic and export demand.