This item is from earlier today - statement from Fitch Ratings 9via Reuters):
Japan's public debt burden is likely to remain high under a new fiscal framework approved last month as the government's structural reforms will not boost economic growth and tax revenue significantly, Fitch Ratings said on Monday.
- Japan's fiscal plan relies almost entirely on achieving high economic growth to increase tax revenue
- But there is little room for the economy to accelerate further as it is already near its potential growth rate
- A lack of binding spending targets in the government's plan also leaves room for spending to rise even further
- A loss of fiscal discipline could harm Japan's economy by putting upward pressure on bond yields and complicates the Bank of Japan's purchases of government debt under its quantitative easing program
"The strategy focuses on enhancing growth through structural reforms as the guiding principle for fiscal consolidation. Many of the planned reforms are positive for enhancing productivity and encouraging investment, but Fitch believes that the government's expectations of their effect on growth are highly optimistic."
Note - Fitch downgraded Japan's credit rating in April by one notch to A, which is five notches below the top AAA rating. The outlook is stable.
USD/JPY gapped lower this morning on the Greek news, but has since closed its gap and stabilized near the top of the session range:
