Japan's government debt rating outlook cut to negative
Xinhua, June 13, 2016 Adjust font size:
The outlook on Japanese government debt rating has been revised to negative from stable by a leading credit rating agency, reflecting declining confidence in the government's commitment to fiscal consolidation.
"Fitch Ratings has affirmed Japan's Long-Term Foreign- and Local-Currency Issuer Default Ratings at 'A' and revised the Outlooks to Negative, " said the world leading rating agency on Monday in a release.
"The Outlook revision primarily reflects Fitch's decreased confidence in the Japanese authorities' commitment to fiscal consolidation," said Fitch, dual-headquartered in New York and London.
The Japanese government announced on June 1 its decision to postpone a scheduled increase in the consumption tax from April 2017 until October 2019, but did not identify any specific offsetting measures. The country has already delayed the hike of consumption tax from the original date of October 2015.
As an important element in the government's fiscal consolidation strategy, the consumption tax increase aims to bring the primary deficit of the general account of the central and local governments into balance by the fiscal year from April 2020 to March 2021 (FY20), against a 3.3 percent deficit in FY15.
Fitch said it expected the increase in the consumption tax rate to 10 percent from 8 percent to yield about 0.8 percent of GDP for deficit reduction.
"When announcing the delay, the government said it remains committed to its target of primary balance by FY20, although it did not set out any further specific measures to achieve this goal," said Fitch. Endit