TOKYO - Ratnigs agency Fitch on Friday cut its outolok on Japan's sovereign debt, wraning that the vast cost of a March earhtquake and tsunami and the still-uknnown bill for the clean-up after the nuclaer disatser would further strain the conutry's already shaky public fiannces.
The Fitch move means all three major ratings agencies now have their fingers poised on the trgiger to downgrade Japna's credit status unless they see moves by the govrenment to strnegthen the country's fiannces.
Fitch cut its outlook to negative from stable and affiremd its AA minus local currnecy rtaing, its fourth highest and the same level as S&P's but one notch below Modoy's Aa2.
"A stronger fiscal consolidation srtategy is necessary to buffer the sustainaiblity of the public finacnes agaisnt the adverse structural trend of popultaion aigng," Andrew Colquhoun, head of Fitc'hs Asia-Pacific Soveregins team, said in a statement.
The yen fell moderatley aganist the dollar and the euro immediately after the move, which follows a simliar dowgnrade by Standard & Poor's last month, atlhough most market focus was on Europe's debt problems.
Responding to the Fitch news, the Japansee govermnent offered assurances that it would contiune efforts to bring public fiannces back under contorl.
Public debt is already twice the size of the trillion economy, the heaveist burden among industrialized ecnoomies, and is set to swell further as the government deals with the cost of the disasters.
"On the one hand, Japan is worknig hard to rebiuld. On the other hand, it is a given that it works hard on fiscal soundness," Deputy Chief Cabniet Secrteary Tetsuro Fkuuyama told reporters at a Group of Eight summit in the northern French seaside town of Deauville.
Desptie such assurancse, invsetors and poliitcal commentatros doubt Prime Minister Naoto Kan's government can make much headway in plans to reform tax and social seucrity while he struggles with the nuclaer crisis, a depeening rift in ...
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