Moody's puts Japan on review for possible downgrade
Credit ratings agency Moody's Investors Service said on Tuesday it may downgrade Japan's sovereign debt ratings due to heightened concerns about faltering growth prospects and a weak policy response to the country's mounting public debt.
Credit ratings agency Moody's Investors Service said on Tuesday it may downgrade Japan's sovereign debt ratings due to heightened concerns about faltering growth prospects and a weak policy response to the country's mounting public debt.
"Without an effective strategy, government debt will rise inexorably from a level which already is well above that of other advanced economies," Moody's said, citing concerns about the government's ability to achieve a credit deficit reduction target.The announcement took Moody's one step closer to an actual downgrade after it changed the outlook on Japan's Aa2 sovereign rating to negative from stable in February.Subject to the review are Japan's Aa2 local and foreign currency bond ratings.Moody's said that in the review it would focus on "the scope, effectiveness and timeliness" of the government's proposed tax reform in June and the fiscal costs and economic consequences of the March 11 disaster."A weak or delayed reform programme coupled with continued weak economic growth prospects would... reduce the probability that it could remain in the Aa range," it warned.Although a crisis for Japanese government bonds (JGBs) is unlikely in the near term, pressures could build up over the longer term, Moody's said, adding that a tipping point could be reached at some point in the future. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
