Debt: the downgrade of Japan hardly worries … – Le Monde

Le Monde | 09/17/2015 at 09h09 • Updated 09/17/2015 to 9:43 | By Philippe Mesmer (Tokyo, correspondence)

• Why Standard & amp; Poor’s does degrade the note of Japan?

The decision of the US Agency illustrates a growing distrust in “abenomics” this policy mix monetary easing, recovery plans and structural reforms conducted by the government of Prime Japanese Prime Minister Shinzo Abe to redress the third world economy. The agency also says:

“The possibility that the Japanese recovery strong enough to restore the economy to support the country’s solvency continues to s weaken . Despite the hopes raised at the beginning, the stimulus strategy called “ abenomics ” should not reverse this trend in the next two or three years. “

Between April and June, the Japanese GDP fell by 1.2% yoy. The price index remains near zero, below the target of 2% set by the Bank of Japan (BoJ), and consumption is not improving.

On September 15, the central establishment decided to maintain the current monetary policy, whereas the economy “continuous [was] to recover moderately” . He admitted, however, the impact of the slowdown in emerging economies on exports and imports, and does not rule out new measures to support activity

Read also:. The Japanese economy suffered a relapse

• What is the state of the Japanese economy?

Finance Management public Japanese government has little reassuring the rating agencies. Japan’s debt could reach 247% of GDP in 2016 according to IMF calculations (IMF). The budget requests for the 2016 fiscal year, beginning 1 ^st in April, reaching the record level of 102 400 billion yen (€ 750 billion). If arbitration is not known, important senatorial elections are due in July 2016. It is therefore unlikely that the government is committed to a decline in public spending. In 2015, the budget deficit was 7.7%

The announcements made by the government in June to improve the state of public finances -. One month after the call for IMF “drastic actions” on this – did not convince. Still determined to achieve balance of initial balance (that is to say excluding debt service) by the year 2020 the government still excludes significant spending cuts .

because it expects tax revenues rose by a nominal growth to 3% on average over the next five years. An increase of 8% to 10% of VAT in April 2017 should also contribute. Or the previous VAT increase from 5% to 8% in April 2014, the archipelago was plunged into recession, and structural reforms – the third “arrow” of “abenomics” after monetary policy and stimulus plans -. are still pending

At the same time, an aging population and slower decline in wages that the Japanese are starting to dip into their reserves. The savings rate for the first time fell 1.3% in fiscal 2013 ended in late March 2014

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• What are the consequences of this degradation

In the short term, the decision by S & amp;? P should not be a problem. Fitch Ratings lowered the note in April in Japan, while Moody’s did in December 2014: “triple A” acquired by the archipelago in 1971 now belongs to the distant past

Since 1998. , date of first lowering of its rating, the successive downgrades have never sparked panic nor market crash or the currency. And the archipelago has no problem to borrow, at least for now. The rate on ten-year bond did not exceed 0.367% September 16, 2015. The Nikkei started the sitting of 17 up more than 1%.

It should be said that the Japanese debt own more than 90% by Japanese themselves. Besides the BoJ and its massive program of acquisition of assets, major banks and Japan Post finance the purchase of the good by drawing on the significant savings of the population, the amount of which remains at around 1400 000 billion yen (10 315 billion), more than two and half times the GDP. Japan also has substantial foreign exchange reserves at 1244 billion dollars (1100 billion) at the end of August.

But local borrowing capacity could dry up to 2020. Japan should then resort to foreign investors; which could expose it to pressures similar to those that led to the Greek crisis.