- CNTV English - CCTV News

Homepage > News > Biz >

Japan's debt rating placed on review for possible cut by Moody's

06-01-2011 08:01 BJT

TOKYO, May 31 (Xinhua) -- Japan's sovereign debt rating was placed on review Tuesday by Moody's Investors Service Inc. for a possible downgrade on mounting concerns about the nation's fiscal health.

The rating agency is reviewing Japan's Aa2 local and foreign currency bond ratings stating that there was "heightened concern that faltering economic growth prospects and a weak policy response would make more challenging the government's ability to fashion and achieve a credible deficit reduction target."

Moody's initially assigned a negative outlook to Japan's domestic and foreign bond ratings on Feb. 22, having left its rating unchanged since May 18, 2009.

In the wake of the March 11 twin disasters, the cash-strapped Japanese government is floundering in its attempts to raise the monumental funds needed to comprehensively address reconstruction needs and parliamentary divides are further impairing the government of Prime Minister Naoto Kan's ability to enact essential budget-related bills.

As Kan faces the threat of a no-confidence motion being submitted by the main opposition Liberal Democratic Party, opposition parties have also impeded the issuance of deficit- covering bonds for the current fiscal year, meaning the gap between revenue and spending allocations could widen by as much as 40 percent, before spending on reconstruction is considered.

Moody's said that without some credible intervention to curb spending or boost revenue, the nation's debt level "will rise inexorably from a level which already is well above that of other advanced economies."

The Organization for Economic Cooperation in its global economic outlook report released on May 25 said that Japan must reduce its budget deficits and downgraded its forecast for the nation's gross domestic product for the second time in two months, reflecting Moody's call for the government to improve its fiscal predicament.

In its latest report the Paris-based OECD, comprising 34 of the world's richest nations, said that Japan has yet to produce credible plans to stabilize its burgeoning debt and needs to specify how it will achieve such goals.

Japan's debt burden is expected to reach 212.7 percent of GDP at the end of this year and 218.7 percent in 2012, in lieu of a viable fiscal consolidation plan.

Japanese Economics Minister Kaoru Yosano told reporters Tuesday that the news from Moody's was troubling and means that global markets are urging the Japanese government to take concrete steps towards fiscal consolidation.

"The government needs to show strong-willed effort to implement a tax and social security overhaul" being planned for release late next month, Yosano said.

Editor:Yang Jie |Source: Xinhua

Hot Videos view more

The celebrations are still continuing as the victorious coach, Joachim Loew, has been honored for his achievement in his hometown of Freiburg.
Germany coach Loew honored in hometown of Freiburg

Chinese men´s national team continued its preparations for next year´s Asian Cup, as they managed a one-all draw against visitors Jordan during a football friendly in Harbin, the capital city of Northeast China´s Heilongjiang Province.
China held to 1-1 draw by Jordan

The defending world champs came into the contest with a perfect 6-and-oh record, but they would be in for a tough first half before opening things up in the second.
USA beat Slovenia 119-76 in quarter-finals

Hot Stories more

UK authorities believe killer of James Foley is a British national

Across the UK the hunt is on for James Foley’s killer, who authorities believe is a British national. As Richard Bestic reports from London, Prime Minister David Cameron cut short his summer break to lead his government’s response.

Israeli war jets renews Gaza strike as truce talks stalled

Three Palestinians were killed and 40 others wounded in the intensive Israeli war jets´ airstrikes on the Gaza city on Tuesday night, shortly before an end of a 24-hour ceasefire in the Gaza Strip,

Missouri police arrest dozens after violent night

As the protests in the town of Ferguson, Missouri turned violent with police facing ´heavy gunfire´ from some ´criminal elements´, cops fired tear gas, stun grenades and arrested 31 demonstrators on Monday night.

Picture in news more

More Video News

Choose TV Program