Fitch Ratings warned that Japan’s new stimulus package could add fiscal risks if it leads to a sustained loosening of policy and pushes government debt higher. While the package is large — roughly 3.4% of GDP — Fitch said its true fiscal impact is unclear because some measures are non-fiscal, spread over multiple years, or face implementation risk.
Fitch noted Japan still has rating headroom after recent stronger fiscal performance, but stressed that persistently higher spending or rising real interest rates could threaten the country’s A/Stable rating. The agency continues to expect debt/GDP to decline gradually in coming years, but reiterated that Japan’s exceptionally high debt and weak medium-term growth remain major vulnerabilities.
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The Fitch caution may moderate JGB bullishness and raises focus on Japan’s debt path and policy mix, though the agency’s tone remains measured rather than overtly negative.
