Press Conference by Taro Aso, Deputy Prime Minister, Minister of Finance, and Minister of State for Financial Services

(Excerpt)

(Tuesday, April 28, 2015, 10:48 am to 11:05 am)

[Questions and answers]

Q.

Yesterday evening, Fitch Ratings, a foreign credit rating agency downgraded Japan’s sovereign debt by one notch. The reason given was that fiscal measures to make up for the postponement of the increase in the consumption tax rate to 10% have not been incorporated into the budget for this fiscal year. Minister, you may not be in a position to comment on ratings from a particular rating agency, but in the past a Ministry of Finance (MoF) official submitted written opinions to rating agencies. Last year it was Moody’s, and this year it’s Fitch, so it’s still only two agencies, but if it comes to three agencies having done it, would you consider instructing MoF officials to express some sort of opinion?

A.

That’s a hypothetical question, isn’t it? It’s a hypothetical question, but we currently have no plans to prepare a formal objection. In the past, when rating agencies gave Japan a lower credit rating than Botswana, someone wrote an objection from Japan. Do you remember who it was that wrote that objection?

Q.

It was former Vice-Minister Kuroda.

A.

Mr. Kuroda wrote it, right? I spoke to him recently, and this kind of thing comes up again and again, so I don’t intend to make a comment every time it does. I also don’t think all of the others are going to immediately do the same thing, so I don’t have anything in particular to say.

Q.

Regarding the Fitch rating, although it is indeed a decision taken by one rating agency, what do you think is the most important thing for Japan to do right now? Japan has been subject to such a decision, and even though it has indeed been made by one rating agency, what do you, Minister, think is the most important thing to do now to ensure that Japan continues to maintain the trust of outsiders?

A.

In Japan’s case, all say that not just Fitch, but also Standard & Poors, they don’t have people who know about Japan’s current situation and write based on that. If you ask them whether they were in Japan, and how long they were in Japan, no one knows. Those are the sort of places they are, so they just go by published figures. In that sense, in the case of Japan, if you look at the balance sheet or other data, all you can see is that Japan uses bonds to fund a high proportion of its budget, how much it is as a proportion of GDP, things like that. That’s going to be the approach. It’s understandable. But in the case of Japan, I think the proportion of bonds bought by people overseas using their own country’s currencies is now less than 10%. So people in other countries are also buying in yen not dollars, and I think there are only four countries that issue government bonds and sell them overseas in their own currencies. Many people don’t realize that we are one of those countries, and we’re being careful in that respect. To achieve fiscal consolidation, we’re following proper procedures, and it took 20 years to overcome deflation, so we’re not going to be able to just eliminate the debt easily in one year or so. Economics isn’t that easy. But we’re moving in the right direction. At the very least, five years ago we set a goal for Fiscal 2015. I think we’ve more or less achieved it. Our next goal will be for Fiscal 2020, and I’d like to announce it by the summer. Japan has a responsible attitude of doing such things properly, and will adopt a proper attitude to our fiscal situation, and having said that, proper implementation is probably the most important thing. People like explaining things in words, but unless measures have substance, they are meaningless.