Japan’s country rating could fall, Moody’s rating agency warns

Moody’s rating agency warned Japan that it could diminish the country’s rating Aa2 because of the fears regarding the perspectives of improving the economy. More, another fear of the rating agency is the weak reaction of the authorities to the public debt, a very big one, according to Reuters.  In an official statement of the agency, the officials said that without an effective strategy, the Government’s debt will raise very much from a level that is already raised beyond other advanced economies. The financial evaluation agency said that there are fears regarding the Government’s capacity to touch the target of the credit’s deficit reduction.  Moody’s is now at one step close to the reduction of the Japan’s rating, after it changed the perspective from stable to negative in February. 

In the official statement, the agency said that it will focus on the proportions, the efficacy and the fiscal reform’s opportunity of the Government for June, but the fiscal costs too and the economical consequences  of the natural disaster from March 11 when a 9 magnitude earthquake followed by a tsunami hit the country.  The agency’s analysts said that a weak or a late reform program, along with less chances for an economic growth, will reduce the possibility that the rating to remain into Aa category. They added that a crisis of the governmental obligation is less probable on a short term but the pressure could accumulate on a long term. The economy though offered some recovery signs on last week, the strongest since the March earthquake, but the analysts thinks is not enough.

This is the second recession for the world’s third biggest economy in three years. The Moody’s analysts said that in this moment, what Japan needs is for the Prime Minister Naoto Kan and his Government to have a strong tax policy and social reforms that will assure the country’s credibility and the budget’s deficit. More, the parliament has lost its faith into Kan’s ability to handle the post nuclear threat. The parliament invested him with a no-confidence vote and the analysts thing that he will pass over this political challenge. Kan told the parliament that he will not go and he will do all his best to resolve the Japan’s worst nuclear crisis from the last 25 years. The natural disaster that left Japan in this big crisis is a 9-magnitude earthquake followed by a tsunami that happened in the northeast part of the country and the balance showed 24.000 . The tsunami had as a primal consequence the nuclear accident of the power plant Fukuhsima, that was worse than the Chernobyl one, according to the experts. 

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