Tokyo could see debt downgrade, says S&P

Written by Reuters | Tokyo | Updated: Sep 29 2013, 01:14am hrs
Japan could face a debt downgrade if it does not shrink its budget deficit, which is unlikely to return to primary balance by a fiscal 2020 target even if Prime Minister Shinzo Abes policies go well, an official from Standard & Poors said on Friday.

The ratings agency remains doubtful about the scale of Japanese welfare reform and how much spending can be cut, Takahira Ogawa, director of sovereign ratings at Standard & Poors, said.

Abe is set to announce around October 1 that sales tax will be raised to 8% from 5% in April to pay for welfare spending. S&P has a AA- rating on Japan, which is three notches from the top rating, with a negative outlook.