Credit rating agency Moody’s is unlikely to take negative rating action against Japan even if the government fails to meet its primary budget target next fiscal. According to the Japanese state analyst, this goal should be seen as a commitment to budget reform.
Christian de Guzman said he did not expect the budget target for the fiscal year starting April 2025 to be met, but that failure would not lead to negative rating action.
“If they abandon that commitment and we see that this is then followed by actual deterioration and a significant deterioration in the fiscal deficit, leading to much higher debt, then I think we need to examine the pillars of the rating,” he said.
