Japanese Prime Minister Yoshihiko Noda said Standard & Poor’s credit rating downgrade of nine European nations underscores how critical it is to boost Japan’s finances to contain the world’s largest public debt load.
Europe’s fiscal situation “isn’t a house burning on the other side of the river,” Noda said on TV Tokyo Holdings Corp’s “Weekly News Shinsho” programme yesterday. “We must have a great sense of crisis.”
Noda reshuffled his cabinet last week, in a move aimed at winning support for trimming Japan’s soaring debt by doubling the five per cent national sales tax by 2015. S&P said in November Noda’s administration hasn’t made progress in tackling the public debt burden, an indication the credit rating company may be preparing to lower the nation’s sovereign grade.
Japan’s government, which has enjoyed borrowing costs that are around one per cent, wouldn’t be able to manage its finances if bond yields surged to three per cent, Noda said yesterday. The country risks seeing a spike in government bond yields unless it controls a debt load set to approach 230 per cent of gross domestic product in 2013, the Organisation for Economic Cooperation and Development said on November 28.
“The finance ministry is closely monitoring daily moves in Japan’s yields,” Finance Minister Jun Azumi said during a Fuji Television Network Inc program today.
He reiterated Noda’s statement that Japan should see the European debt crisis as an issue the nation may face in the long term unless it tackles fiscal problems. About 57 per cent of the public opposes raising the sales tax, and the approval rating for Noda’s cabinet fell to 29 per cent from 31 per cent last month, the Asahi newspaper said.