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"Fitch Ratings has downgraded Japan‘s credit rating because of the rapid deterioration of public finances in the world’s most indebted nation since the global financial crisis.
While the move is unlikely to have much effect on prices of Japanese government bonds, analysts said, it may help to galvanise support within Japan’s parliament for a bill to double the country’s 5 per cent consumption tax. The bill, which Yoshihiko Noda, Japan’s prime minister, hopes to pass before the end of the parliamentary session next month, is the centrepiece of the ruling party’s efforts to put public finances on a firmer footing.Separately on Tuesday, the Organisation for Economic Co-operation and Development said that lifting the country’s consumption tax in 2014, “if not before,” should be a “top priority” if Japan is to maintain confidence in its fiscal situation.
Government debt is projected to hit 239 per cent of gross domestic product by the end of 2012, Fitch noted – by far the highest of any sovereign under its coverage. Japan’s ratio has risen by 61 percentage points since 2008, compared with a median of 39 percentage points for OECD economies, and just 8 percentage points for A-range sovereigns, it said."
What do you think?
Japan usually runs account balance surplus, so is this high government debt - 239% of the GDP dangerous?
Why are there problems in the EZ after all EZ government debt is like third compare to GDP...