Standard and Poor’s (S&P) said Japanese Prime Minister Yoshihiko Noda’s administration has not made progress in tackling the public debt burden, an indication the ratings agency could be preparing to lower the nation’s sovereign grade.
“Japan’s finances are getting worse and worse every day, every second,” Takahira Ogawa director of sovereign ratings at S&P in Singapore, said in an interview. Asked if that means he is closer to cutting Japan, he said it “may be right in saying that we’re closer to a downgrade, but the deterioration has been gradual so far, and it’s not like we’re going to move today.”
A reduction in S&P’s “AA-” rating would be a setback for Noda, who took office in September and has pledged to both steady Japan’s finances and implement reconstruction from the earthquake and tsunami in March. It is unrealistic for Japan to think it can escape the debt woes that have engulfed other nations unless it can control its finances, Ogawa said.
While Japan has enjoyed borrowing costs at global lows for its debt, the IMF said in a report released on its Web site on Wednesday that there is a risk of a “sudden spike” in yields that could make the debt level unsustainable.
S&P has had Japan on a negative outlook since April. Ogawa said the nation needs a “comprehensive approach” to containing its debt burden, which the government projects will exceed ￥1 quadrillion (US$13 trillion) in the year through March as the nation pays for reconstruction.
The yen pared gains after Ogawa’s remarks and was trading at ￥77.15 against the US dollar as of 3:23pm in Tokyo yesterday. Yields on Japan’s benchmark 10-year government bond rose to as high as 0.98 percent yesterday from the previous close of 0.965 percent, before the nation’s markets shut on Wednesday for a holiday. The Nikkei 225 Stock Average dropped 1.8 percent to 8,165.18, its lowest close since March 2009.
“The events in Europe show us that when you lose market confidence at some point, the situation deteriorates fast,” Ogawa said. “Politicians need to act with the understanding that they are running out of time” to fix the nation’s finances. “If you don’t act early, it will become even more difficult” to maintain market trust, he said.
Japan’s lower house of parliament yesterday approved legislation that would add an additional 2.1 percent levy to an individual’s annual payment. Lawmakers revised the government’s proposal to extend the period of the measure from 10 years to 25 years, to help pay for reconstruction. The measure will take effect in 2013.
“Just because this passes does not mean that it’s positive for the public finances,” Ogawa said. “Politicians are squabbling over the minute details, while avoiding what’s most important.”
While Japan’s policymakers have signaled they will double the nation’s sales tax from 5 percent by about 2015, a bill has yet to be enacted.
Moody’s Investors Service cut the nation’s debt rating by one step to “Aa3” on Aug. 24. S&P lowered Japan to “AA-” in January and Fitch Ratings also has Japan at “AA-,” with a negative outlook.
Intel Corp chief executive officer Lip-Bu Tan (陳立武) is expected to meet with Taiwanese suppliers next month in conjunction with the opening of the Computex Taipei trade show, supply chain sources said on Monday. The visit, the first for Tan to Taiwan since assuming his new post last month, would be aimed at enhancing Intel’s ties with suppliers in Taiwan as he attempts to help turn around the struggling US chipmaker, the sources said. Tan is to hold a banquet to celebrate Intel’s 40-year presence in Taiwan before Computex opens on May 20 and invite dozens of Taiwanese suppliers to exchange views
Application-specific integrated circuit designer Faraday Technology Corp (智原) yesterday said that although revenue this quarter would decline 30 percent from last quarter, it retained its full-year forecast of revenue growth of 100 percent. The company attributed the quarterly drop to a slowdown in customers’ production of chips using Faraday’s advanced packaging technology. The company is still confident about its revenue growth this year, given its strong “design-win” — or the projects it won to help customers design their chips, Faraday president Steve Wang (王國雍) told an online earnings conference. “The design-win this year is better than we expected. We believe we will win
Chizuko Kimura has become the first female sushi chef in the world to win a Michelin star, fulfilling a promise she made to her dying husband to continue his legacy. The 54-year-old Japanese chef regained the Michelin star her late husband, Shunei Kimura, won three years ago for their Sushi Shunei restaurant in Paris. For Shunei Kimura, the star was a dream come true. However, the joy was short-lived. He died from cancer just three months later in June 2022. He was 65. The following year, the restaurant in the heart of Montmartre lost its star rating. Chizuko Kimura insisted that the new star is still down
While China’s leaders use their economic and political might to fight US President Donald Trump’s trade war “to the end,” its army of social media soldiers are embarking on a more humorous campaign online. Trump’s tariff blitz has seen Washington and Beijing impose eye-watering duties on imports from the other, fanning a standoff between the economic superpowers that has sparked global recession fears and sent markets into a tailspin. Trump says his policy is a response to years of being “ripped off” by other countries and aims to bring manufacturing to the US, forcing companies to employ US workers. However, China’s online warriors
RSS