Standard & Poor's today lowered Japan's long-term sovereign credit rating to AA- from AA, saying it expected the country's fiscal deficits to stay high in coming years.
'The downgrade reflects our appraisal that Japan's government debt ratios - already among the highest for rated sovereigns - will continue to rise further than we envisaged before the global economic recession hit the country and will peak only in the mid-2020s,' the rating agency said.
'In our opinion, the Democratic Party of Japan-led government lacks a coherent strategy to address these negative aspects of the country's debt dynamics,' it added. The AA- rating is the fourth highest in terms of quality on a scale of 22.
On Monday, Japanese Prime Minister Naoto Kan said his government was working towards drafting a basic proposal by the end of June on overhauling the nation's tax and social security systems.
Japan's public debt is the industrialised world's biggest, at twice the size of the $5 trillion economy, with the welfare costs and revenue shortfall associated with a rapidly greying population adding further pressure.
