UPDATE 1-IMF's Lagarde says confident Japan will stick by reform pledges
(Adds further Japan comment, background)
WASHINGTON, Aug 1 (Reuters) - The head of the International Monetary Fund expressed confidence on Thursday in Japan's commitment to structural reforms and budget consolidation, including an expected increase in the country's sales tax.
Japan's commitment to credible medium-term fiscal strategies was a key concern of some countries during the recent Group of 20 meeting of finance ministers and central bankers in Moscow. The country has run a large budget deficit to stimulate its economy under Prime Minister Shinzo Abe, and the value of its yen currency has fallen sharply.
Abe returned to power in December pledging to revive the world's third-largest economy with his mix of aggressive fiscal and monetary stimulus and promises of longer-term pro-growth reforms, what the government calls "three arrows."
"I have faith in Prime Minister Abe when he says that there will be three arrows to his bow and that he will launch the three arrows," IMF Managing Director Christine Lagarde told reporters on Thursday. "This prime minister has leadership and courage, and I trust that he will do it."
Abe is on course to raise Japan's sales tax as scheduled in a crucial step toward fixing the nation's tattered finances, despite calls in his government to water down the increase.
Abe has said he faces a "difficult decision" choosing between his top priority of fostering growth in the world's third-biggest economy and starting to rein in the industrial world's heaviest public-debt burden.
The top tax officials in Abe's ruling coalition parties said earlier this week the premier is on course to raise the sales tax to 8 percent in April from 5 percent now and then to 10 percent in October 2015 - Tokyo's most significant fiscal reform in decades.
Lagarde said the IMF has always been supportive of an increase in Japan's sales tax.
"We believe it's one of the strongest indications that Japanese authorities can give of their determination to do fiscal consolidation in a sustained fashion," she said.
(Reporting by Anna Yukhananov; Editing by Bill Trott and Ken Wills)