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TOKYO (Reuters) – Fitch cut Japan’s sovereign credit status on Tuesday to the lowest level among global ratings agencies as a political stalemate dims the chance that the country can curb its snowballing debt.
Fitch Ratings cut Japan’s long-term foreign currency rating by two levels to A plus from AA. It cut the more important local currency rating by one notch to A plus from AA minus. Both were given a negative outlook.
Fitch warned that further downgrades were possible unless the government takes new fiscal policy measures to stabilise public finances and its ratio of debt to gross domestic product.
“The downgrades and negative outlooks reflect growing risks for Japan’s sovereign credit profile as a result of high and rising public debt ratios,” Andrew Colquhoun, head of Asia-Pacific sovereigns at Fitch said in a statement.
“The country’s fiscal consolidation plan looks leisurely, relative even to other fiscally challenged high-income countries, and implementation is subject to political risk.”