Japan needs to "clear" order to reduce the world's largest government debt, said Moody's Investors Service, after conflicting statements by the Prime Minister Yuko Hatoyama (Yukio Hatoyama) and head of financial management as to the intention to sell bonds next year.
"Reducing the deficit and debt targeting should help support the rating," - said yesterday the senior vice president of Moody's Investors Service, Thomas Bern (Thomas J. Byrne) in a telephone interview from Singapore. "Most of all we are concerned about the lack of clearly defined long-term fiscal consolidation and debt reduction plan."
Hatoyama hinted that may allow the sale of debt over 44 trillion. yen to support economic growth, while Finance Minister Hirohisa Fujii (Hirohisa Fujii) stated that the restrictions must be strictly observed. Faced with a reduction in tax revenues and inflate public debt, the new government, which the three-month-old trying to support the spending cap without stifling the recovery processes in the country after the worst postwar recession.
"At the moment, the strategy is not formulated," - said Bern. "That's why we are so closely observed."
Yesterday, Japan's Cabinet approved the budget targets for the year beginning April 1, and said he would keep the issue of bonds at around 44 trillion. yen ($ 495 billion). Deputy Prime Minister Naoto Kan, said yesterday that the continued restrictions on the issuance of bonds plays an important role in preventing the growth of profitability of long-term debt. However, the scheme does not mention specific guidelines for containment of the debt.
"The method of trial and error"
"In the past, the system was stable," - says Seyzhi Shiraishi (Seiji Shiraishi), chief economist at HSBC Securities Japan Ltd. Tokyo. "But now the government destroys the previous system and works by trial and error.
The yield on the benchmark 10-year-old bond fell to 1.260% at 12:42 on Tokyo time of the day. The yen, which reached 14-year high against the dollar last month, is trading at around 89.59.
To restore the financial situation in the country, the government will make a medium-term budgetary framework in the first half of next year, according to established budgetary principles. The Government will also seek to reduce the deficit and a stable basis of the ratio of debt to GDP ratio in the long term, "he said.
Standard & Poor's also focuses on medium-term budgetary trajectories and feasibility of government policy on fiscal consolidation, "said Takahiro Ogawa (Takahira Ogawa), director of sovereign ratings at S & P in Singapore.
"We believe that the credit rating of Japan is inclined to the tendency to deterioration, but not in the least, to change our views or to lower it," - said yesterday Ogawa. S & P evaluates Japan's sovereign credit rating in the AA with a stable outlook for the future.
Failure to maintain the ceiling
Even if the Japanese government is unable to keep the ceiling the sale of bonds, it would not necessarily influence the opinions of Moody's credit rating on Japan, "said Bern. Rating Moody for Japan - ??2, which is the third of the maximum investment level with a stable outlook for the future.
"One year of exceptionally large budget deficit will not automatically have a negative impact on the rating," - said Bern. "The government in any year may issue a set of bond, it may be done specifically for this year, and this is a normal practice, if there is a medium-term plan, which reliably confirms the future deficit reduction."
Former Prime Minister Junichiro Kozumi (Junichiro Koizumi), who was a deputy in the Liberal Democratic Party, meant the goal of balancing the budget by the end of March 2012. Administration Taro Aso (Taro Aso), which was dissolved Hotoyamoy elections in August, refused from that goal and set it for 10 years. Aso also set new targets for reducing the budget deficit to GDP by early 2020-ies.
"We believe very likely that the funding next year or two will be no upward pressure on interest rates", - said Bern. "We fear that the funding and the availability of public debt will be at risk only if they are not articulated long-term goal of fiscal consolidation.
"Reducing the deficit and debt targeting should help support the rating," - said yesterday the senior vice president of Moody's Investors Service, Thomas Bern (Thomas J. Byrne) in a telephone interview from Singapore. "Most of all we are concerned about the lack of clearly defined long-term fiscal consolidation and debt reduction plan."
Hatoyama hinted that may allow the sale of debt over 44 trillion. yen to support economic growth, while Finance Minister Hirohisa Fujii (Hirohisa Fujii) stated that the restrictions must be strictly observed. Faced with a reduction in tax revenues and inflate public debt, the new government, which the three-month-old trying to support the spending cap without stifling the recovery processes in the country after the worst postwar recession.
"At the moment, the strategy is not formulated," - said Bern. "That's why we are so closely observed."
Yesterday, Japan's Cabinet approved the budget targets for the year beginning April 1, and said he would keep the issue of bonds at around 44 trillion. yen ($ 495 billion). Deputy Prime Minister Naoto Kan, said yesterday that the continued restrictions on the issuance of bonds plays an important role in preventing the growth of profitability of long-term debt. However, the scheme does not mention specific guidelines for containment of the debt.
"The method of trial and error"
"In the past, the system was stable," - says Seyzhi Shiraishi (Seiji Shiraishi), chief economist at HSBC Securities Japan Ltd. Tokyo. "But now the government destroys the previous system and works by trial and error.
The yield on the benchmark 10-year-old bond fell to 1.260% at 12:42 on Tokyo time of the day. The yen, which reached 14-year high against the dollar last month, is trading at around 89.59.
To restore the financial situation in the country, the government will make a medium-term budgetary framework in the first half of next year, according to established budgetary principles. The Government will also seek to reduce the deficit and a stable basis of the ratio of debt to GDP ratio in the long term, "he said.
Standard & Poor's also focuses on medium-term budgetary trajectories and feasibility of government policy on fiscal consolidation, "said Takahiro Ogawa (Takahira Ogawa), director of sovereign ratings at S & P in Singapore.
"We believe that the credit rating of Japan is inclined to the tendency to deterioration, but not in the least, to change our views or to lower it," - said yesterday Ogawa. S & P evaluates Japan's sovereign credit rating in the AA with a stable outlook for the future.
Failure to maintain the ceiling
Even if the Japanese government is unable to keep the ceiling the sale of bonds, it would not necessarily influence the opinions of Moody's credit rating on Japan, "said Bern. Rating Moody for Japan - ??2, which is the third of the maximum investment level with a stable outlook for the future.
"One year of exceptionally large budget deficit will not automatically have a negative impact on the rating," - said Bern. "The government in any year may issue a set of bond, it may be done specifically for this year, and this is a normal practice, if there is a medium-term plan, which reliably confirms the future deficit reduction."
Former Prime Minister Junichiro Kozumi (Junichiro Koizumi), who was a deputy in the Liberal Democratic Party, meant the goal of balancing the budget by the end of March 2012. Administration Taro Aso (Taro Aso), which was dissolved Hotoyamoy elections in August, refused from that goal and set it for 10 years. Aso also set new targets for reducing the budget deficit to GDP by early 2020-ies.
"We believe very likely that the funding next year or two will be no upward pressure on interest rates", - said Bern. "We fear that the funding and the availability of public debt will be at risk only if they are not articulated long-term goal of fiscal consolidation.
Bloomberg
December 16
December 16
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