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Saturday, Jan. 29, 2011

Kan defends being S&P-blindsided

Staff writers

Prime Minister Naoto Kan on Friday defended his remarks on the downgrade of Japan's sovereign credit rating by Standard & Poor's, saying he had yet to be informed of the news when he said he was "not familiar with the matter."

News photo
Naoto Kan

Kan's remark Thursday drew criticism from opposition lawmakers and market analysts, who said it appeared as if the prime minister was ignorant of the meaning and possible impact of the S&P downgrade, which lowered Japan's rating to AA- from AA, the first cut in nine years.

Later in the day, Kan said it was "good" that the latest downgrade of Japan's sovereign debt rating by Standard & Poor's has not had a big influence on financial markets.

"Today, there was no big impact on markets by this and on this point it was good," Kan told reporters in the evening. "I believe there is still confidence in our country."

Kan made the remarks a day after S&P cut Japan's long-term sovereign debt rating for the first time since 2002, saying his government "lacks a coherent strategy" for reducing its huge debt burden.

Before leaving his office for the Swiss resort of Davos to attend the annual gathering of the World Economic Forum, Kan also said he is well aware of the significance of credit ratings and added Japan remains committed to fiscal consolidation.

"Greece was hit by a financial crisis when I served as finance minister. . . . I have come to realize with a pang the importance of matters related to government bonds," Kan said during a plenary session of the Upper House.

It is important for the government to maintain fiscal discipline and retain market confidence in the fiscal condition of Japan, Kan said.

When asked his opinion on S&P's rating cut Thursday evening following a Lower House plenary session, Kan told reporters he would comment later because he was "not familiar with the matter."

Kan said he didn't know of the rating downgrade until the reporters asked him about it, revealing he wasn't informed of it more than an hour after the news broke.

Among the reasons the ratings agency cited for the downgrade was that the ruling Democratic Party of Japan, which Kan heads, lacks a "consistent strategy" on reducing the national debt.

S&P also said it believes the DPJ-led government may not be able to clear budget-related bills through the divided Diet that would allow the government to issue bonds.

New Komeito leader Natsuo Yamaguchi lashed out at Kan over his remark.

"I couldn't believe what I heard," he said in the upper chamber.

Information from Kyodo added.

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The Japan Times

Article 4 of 13 in National news

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