Fitch Downgrades Japan's Sovereign Rating
Tokyo, May 23 (RHC)-- The ratings agency Fitch on Tuesday lowered its assessment of Japan’s sovereign credit to "A+" -- an investment grade just above those of Spain and Italy -- and criticized Tokyo for not doing more to pare down its burgeoning debt.
The downgrade, Fitch’s first for Japan since 2001, underscores the sheer scale of the country’s debt burden, as well as political and demographic challenges that have hampered efforts to tackle it.
Fitch warned that Japan’s public debt will hit almost 240 percent of its gross domestic product by the end of the year. The new rating also heightens the pressure on Prime Minister Yoshihiko Noda to rein in spending and raise taxes at a delicate time, when the Japanese economy is still recovering from natural and nuclear disasters last year.
Fitch lowered Japan’s long-term local currency rating to A+ from AA. It also cut the country’s foreign currency rating to A+ from AA. The A+ rating puts Japan four notches below the ratings of other major economies like the United States, Britain, France and Germany, which all retain the top AAA rating from Fitch. Two other global ratings agencies, Standard & Poor’s and Moody’s Investors Service, lowered Japan’s credit rating last year.