Moody's: Japan political impasse a concern for debt outlook

Fri Oct 12, 2012 12:42am EDT
 
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By Stanley White

TOKYO (Reuters) - The stand-off between Japan's government and opposition parties is a concern as it has stalled important legislation needed to fund government spending, credit rating agency Moody's Investors Service said on Friday.

Japanese policy making has ground to a halt since the end of the regular session of parliament last month due to a standoff between the government and the opposition.

This has delayed a bill that is crucial to funding the budget for the current fiscal year and could delay the government's response to a slowing economy.

Japan's politicians still have some time to bring down debt as government bond yields are likely to remain low and the current account balance is likely to remain in surplus for the time being, Moody's senior vice president and regional credit officer Tom Byrne told reporters.

"Confidence in Japan's government is tenuous," Byrne said.

"Tight Japanese government bond yields are likely to remain, and this gives the authorities some time to reduce deficits."

Moody's rates Japan at Aa3, three notches below the top AAA rating, with the outlook at stable.

Legislation needed to sell bonds for this fiscal year's budget is in limbo. Opposition parties, who control the upper house and can block legislation, have been stalling to force the government to dissolve the lower house and call an election.   Continued...

 
The logo of credit rating agency Moody's Investor Services is seen outside the office in Paris October 24, 2011. REUTERS/Philippe Wojazer