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Friday, May 27, 2011

Japan Sovereign debt rating outlook cut from stable to negative:Fitch

Ratings agency Fitch on Friday cut its outlook on Japan's sovereign debt to negative from stable, warning that the massive cost of a March earthquake and tsunami would put added strain on the country's already shaky public finances. It maintained AA rating on Japan.

"Japan's sovereign credit-worthiness is under negative pressure from rising government indebtedness," said Andrew Colquhoun, head of Fitch's Asia-Pacific Sovereigns team in a statement.

"A stronger fiscal consolidation strategy is necessary to buffer the sustainability of the public finances against the adverse structural trend of population ageing."

Country's debt is almost twice the size of its $5 trillion economy, that inches up as reconstruction cost after  Massive Earthquake and tsunami had damaged a lot.

However, the country's deepest crisis since World War Two has not healed rifts between the government and the opposition, whose majority in the upper house stands in the way of fiscal reform.

Fitch said Japan's public indebtedness was also rising sharply, at a pace trailing only Ireland and Iceland, "both of which have experienced systemic banking crises".


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