Moody’s Says It May Cut Japan’s Credit Rating

Japan’s credit rating may be cut, Moody’s Investors Service said, noting that government debt is swelling and that there’s little chance it can be reduced without threatening economic growth. “The review is prompted by structural problems in Japan’s economy that have resulted in a level of public-sector debt that will soon be the highest, relative to [gross domestic product], among the advanced industrial economies,” Moody’s said in a statement. “Given the scale of Japan’s fiscal imbalance, meaningful fiscal correction might jeopardize economic recovery.” Moody’s cut Japan’s top-notch “AAA” rating in November 1998. The country still holds its “AAA” rating from Standard & Poor’s Corp. that was granted in 1975. Japan has poured more than $1 trillion into spending packages since 1992. New debt sales will be equal to about 40% of government revenue in the fiscal year that begins April 1. The government has put together a record $772-billion budget for the fiscal year, on top of $59 billion of spending unveiled in November.