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.
Just a few years ago, the millennial generation — generally defined as those born from the early 1980s through the mid-1990s — was synonymous with youthful rebellion. However, now, as the millennials ease into early middle age, they are finding their path out of their parents’ basement to be a lot harder than it was for earlier generations. The fundamental problem is that millennials are not building wealth. The wealth of the median US household headed by someone 35 or younger has actually shrunk in inflation-adjusted terms since the mid-2000s, even as the wealth of older Americans has continued to grow. An
Gogoro Inc (睿能創意) yesterday launched its first electric bicycle, the Gogoro Eeyo 1, in Taiwan, after unveiling the bike in New York in late May and in France on Tuesday. The company said it would also introduce the series in other European countries such as Germany and the Netherlands. The “Eeyo project” is the fourth of Gogoro’s eight projects that concentrate on smart transportation, which includes Gogoro’s electric scooter, battery swap system and electric scooter sharing service, company founder and chief executive officer Horace Luke (陸學森) told a media briefing in Taipei. “There are various types of city commuters. We will not
EXPERIMENTAL DRUG: While news about a COVID-19 vaccine is more eye-catching, developing a treatment would be more viable, the Senhwa boss said Senhwa Biosciences Inc (生華科) aims to raise NT$1.5 billion (US$50.57 million) by issuing 15 million new common shares in the third quarter of this year to fund the research of new drugs, including the experimental drug Silmitasertib for the treatment of COVID-19, the company said on Monday. That would be the firm’s largest fundraising effort after it raised more than NT$1.4 billion from an initial public offering on the Taipei Exchange (TPEX) in April 2017, chief financial officer Sarah Chang (張小萍) told the Taipei Times by telephone. The price of the new shares would depend on the firm’s average share price
NOT A PANACEA: Offering 5G services would not solve the problem of declining telecom incomes, chairman Sheih Chi-mau said, expecting a flat 5G telecom revenue Chunghwa Telecom Co (中華電信) yesterday became the nation’s first telecom to debut its 5G services, offering tiered tariffs that include a threshold of NT$599 and flat rates, as it aims to switch half of its subscribers to the 5G network within three years. Subscribers would have unlimited data transmission for monthly fees starting at NT$1,399 — the same flat rate as when the company launched its 4G service in 2014 — and they can subscribe to the highest-rate plan for NT$2,699 per month for faster data transmission speeds and larger bandwidth, the company said. Data transmission speeds would be within the range