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2011年8月26日 (金)

日本国債格下げ 財政悪化と政策停滞の警鐘だ

The Yomiuri Shimbun (Aug. 26, 2011)
Moody's downgrade a warning over fiscal, political ills
日本国債格下げ 財政悪化と政策停滞の警鐘だ(8月25日付・読売社説)

The major U.S. ratings agency Moody's Investors Service on Wednesday downgraded Japanese government bonds from Aa2, the third-highest rating, to Aa3, the fourth-highest.

The move should be taken as a warning regarding the deterioration of Japan's fiscal situation and the paralysis in its political sphere.

Now the level of Japanese government bonds is lower than those of Italy and Spain, where concern over government finances has been soaring, and the same as those of China and Chile.

In January, another U.S. rating firm downgraded Japanese bonds to the same level.

These are only independent evaluations by private firms, but they serve as guidelines for the creditworthiness of government bonds in the market.

If investors sell off Japanese bonds and force the interest rate to rise because of the downgrade, the government's costs for interest payments will rise, which would aggravate the fiscal situation.

Speculative moves have to be closely watched.


Fiscal rehabilitation in doubt

As reasons for the downgrade, Moody's named Japan's huge fiscal deficit and its doubts whether the country can become fiscally healthy.

The ratings agency said, "Over the past five years, frequent changes in administrations have prevented the government from implementing long-term economic and fiscal strategies into effective and durable policies." It is natural for Japan to receive such a severe evaluation.

Because of the divided Diet, confrontations between ruling and opposition parties have intensified, blocking progress on various policies.

The most pressing issue of all--restoration of fiscal health--has been put off, causing the situation to worsen.

The outstanding long-term debts of the central and local governments combined are expected to be about 900 trillion yen at the end of the current fiscal year, or 1.8 times the gross domestic product.

The country's debt-to-GDP ratio is worse than that of Greece, which is in a profound fiscal crisis.

According to the government's estimate, outstanding debts will balloon to nearly 1,200 trillion yen at the end of fiscal 2020.

The fiscal crises in the West have seriously affected global financial markets, but this situation is not what Japanese would call "a fire on the other side of the river."

Swift reforms in both revenue and spending must be enforced before it is too late.


Political will lacking

However, the politicians of this country have little sense of crisis about the status quo and lack firm determination to move forward with fiscal rehabilitation.

The key issues in the Democratic Party of Japan's presidential election, in which candidates are competing to replace Prime Minister Naoto Kan, will include tax hikes to secure revenue to rebuild from the Great East Japan Earthquake and a review of the dole-out policies in its manifesto for the 2009 House of Representative election.

However, many would-be candidates in the DPJ presidential election are cautious about the early introduction of tax hikes for reconstruction purposes.

Likewise, no one has spoken in-depth about the government policy for integrated reform of the social security and tax systems, which stipulates the consumption tax rate will be raised in stages to 10 percent in the mid-2010s.

The post-Kan administration should make progress in reconstructing from the great earthquake and restoring fiscal health.

The government has to make the economy steadily recover to realize an early exit from deflation. This is indispensable for recovering confidence in Japanese government bonds.

In the coming DPJ election we hope the candidates will discuss policies that prioritize economic growth, such as stabilizing the electricity supply and measures to combat the yen's appreciation.

(From The Yomiuri Shimbun, Aug. 25, 2011)
(2011年8月25日01時09分  読売新聞)


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