The government needs to firmly address its fiscal woes, a Bank of Japan Policy Board member said two days after Moody's Investors Service put the nation's debt rating on review for a downgrade.
"Our nation's finances are under more scrutiny, given we have the highest debt to gross domestic product ratio among major economies," Seiji Nakamura said May 27 in a speech in Nara.
"Fiscal problems can't be solved in the short term. It's important to firmly address these issues while maintaining investor trust."
Moody's said Tuesday that faltering growth prospects and a "weak policy response" by Prime Minister Naoto Kan may hinder the government's efforts to cut a debt burden exceeding 200 percent of GDP. Nakamura also said brighter signs are emerging for an economy that slid into recession last quarter after the record March 11 earthquake disrupted output.
Manufacturers are starting to recover from the quake and tsunami, and consumer spending is showing "some positive developments" as supply constraints are relieved and spending by households improves, said Nakamura, 69, a former executive of Mitsui O.S.K. Lines Ltd.
