TOKYO -- A Japanese credit rating agency on Monday lowered the rating outlook for the country's government bonds from stable to negative in reaction to the postponement of a planned consumption tax increase.
"Uncertainty about the country's fiscal consolidation has increased with no indication of when growth potential will be boosted," Rating and Investment Information said in a statement. This is the first outlook downgrade by a ratings agency since Prime Minister Shinzo Abe announced Wednesday that he will again put off raising the sales tax rate from 8% to 10%.
R&I kept its second-highest AA-plus rating for Japanese government bonds, but warned that "unless reliable and viable measures for fiscal consolidation are presented and implemented, a rating downgrade will be unavoidable."
The ratings agency criticized the lack of results seen from Abe's growth strategies. It also said that pushing back the hike made the government's goal of achieving a primary surplus by fiscal 2020 "more difficult and uncertain."
Abe plans to unveil new economic policies in the fall. But fiscal stimulus without an improvement in Japan's potential growth rate would only lead to a greater burden, the agency said.
While R&I downgraded its outlook, it still rates JGBs higher than many other ratings agencies. Moody's Investors Service and S&P Global both give the debt their fifth-highest rating, while Fitch Ratings places it at the sixth-highest.
Moody's called the tax hike delay "credit negative," while S&P Global said the move had no impact on ratings.