Japan may experience a third "lost decade" of low growth, complicating the government's efforts to reduce the world's largest debt burden, Moody's Investors Service said Monday.

"It is not inconceivable the country would have a third 'lost' decade of growth," Thomas Byrne, senior vice president at Moody's, said in an emailed statement.

The economy would need to expand at double the current pace at a minimum "to help the government grow out of its huge debt burden."

Growth has been stagnant since the asset bubble burst two decades ago, with the size of the economy when not adjusted for price changes near the level it was in 1991. Moody's put the nation's Aa2 sovereign debt rating on review for a downgrade in May, meaning a decision is likely within three months.

"A dire medium-term economic growth outlook further complicates the outlook for government finances," Byrne said, citing an International Monetary Fund forecast that the growth rate in five years will be 1.2 percent, about half the pace of all advanced economies.

Prime Minister Naoto Kan's delay in coming up with a long-term fiscal reform plan is "credit negative," because "it does not anchor government finances in a framework that holds out the possibility for containing debt," he said.