Japan debt rating would be harmed by consumption tax cut: Fitch

Even a leadership change not expected to result in policy reversal

Japan's consumption increase was highly unpopular but withdrawing it is pretty much out of the question due to the country's burgeoning social security needs. © AP

MITSURU OBE, Nikkei staff writer

August 25, 2020 17:39 JST

TOKYO -- Fitch ratings analysts warned on Tuesday that Japan's single-A debt rating would be negatively affected if the country reverses the consumption tax increase it implemented last October, with the country's debt outlook now leaning toward negative.

Reversing last year's tax increase would be "potentially harmful," said Stephen Schwartz, Asia-Pacific head of sovereign ratings at Fitch in an online media conference. He noted that Japan is already the most indebted country among the developed world, with the ratio of public debt to gross domestic product at over 230%.