TOKYO (AP) ― Japan’s prime minister, attempting to build support for painful fiscal reforms, said Saturday that the country should be alarmed by ratings cuts in Europe and must tackle its massive public debts to avoid becoming the next target.
Japan’s debt is more than twice its gross domestic product, higher than any of the struggling European economies whose fiscal problems have set off a eurozone crisis that has reverberated in markets around the world. Japan’s credit rating was downgraded last year, and Prime Minister Yoshihiko Noda said it could be further harmed if the country is seen as dragging its feet on reforms.
Noda commented during a live TV talk show following ratings agency Standard & Poor’s downgrade of nine European countries, including France, one of the strongest economies in the eurozone.
“Even France got its credit ratings changed,” Noda said. “We’ll be in a spotlight if Japan makes an impression that we are dwelling on the current fiscal policy and just let it slide. We must tackle the problems with considerable sense of crisis.”
The rating agency ended France and Austria’s “AAA” status Friday. It lowered Italy’s and Spain’s by two notches and did the same for Portugal and Cyprus. S&P also cut ratings on Malta, Slovakia and Slovenia. France’s downgrade to “AA+” lowers it to the level of U.S. long-term debt, which S&P downgraded last summer.
Noda, who took office in September, reshuffled his Cabinet on Friday in a bid to win cooperation from the opposition and voters to raise the sales tax and rein in the bulging fiscal deficit. He named Katsuya Okada, a former foreign minister, as deputy prime minister to spearhead the efforts.
Noda says Japan urgently needs to reduce its debt burden as the nation ages and its labor force shrinks, putting a greater burden on the social security and tax systems. He has promised to submit a bill by the end of March to raise the 5 percent sales tax in two stages, to 8 percent in 2014 and to 10 percent by 2015.
The plan is unpopular not only among the public and in the divided parliament, but within Noda’s own Democratic party. Powerbroker Ichiro Ozawa and his supporters arguing that raising taxes would hurt the already weak economy.
Nodas public approval ratings have continuously slid since he took office. The latest figure now stands below 40 percent amid resistance to raising the sales tax and a general lack of confidence in political leadership in Japan, which has seen a new prime minister every year for the past six years.
Noda said Saturday the measures are needed to keep Japan alive, and that he must seek the public’s understanding to “share the pain.”
“I will stake my political life to save and protect this country for future generations,” he said.
caption: Japan’s Prime Minister Yoshihiko Noda Reuters-Yonhap News
