Fitch drops ratings on Japanese debt as the country attempts to rein in debt and spur growth

27-Apr (AP, via USNews) — Fitch Ratings has lowered Japan’s credit rating as the country continues to wrestle with staggering debt.

Fitch said Monday that the government did not include sufficient measures in its budget to replace a sales tax hike it put off in the current fiscal year, which ends next March.

Japan’s debt is the largest among developed nations and more than twice the size of its economy. The country eventually has to boost taxes to cover rising costs for health and elder care as the average age in the nation rises. But a sales tax increase last spring hurt consumer and business spending as the Japanese economy slipped into a recession.

That led Prime Minister Shinzo Abe to put off a second, planned hike, illustrating the tough position in which government leaders have found themselves.

Fitch said Monday that Japan’s main credit and rating weakness is due to its high and rising level of government debt. The ratings agency noted that the government has already cut corporate tax rates and plans to do so again in fiscal 2016.

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