Nomura Holdings Inc. says the probability that Prime Minister Shinzo Abe’s economic policies will end badly is increasing.

The worst-case scenario for Toshihiro Uomoto, the company’s chief credit strategist, to the end of 2017: the economy contracts in the first half of 2016, Abe delays a sales tax rise for a second time, and the Bank of Japan boosts asset purchases to suppress interest rates, causing the yen to tumble. This month, he raised the probability of these events unfolding to 10 percent to 20 percent or more, from about 10 percent.

“Signs are mounting that Japan’s fiscal sustainability is beginning to crumble,” said Uomoto, ranked Japan’s No. 1 credit analyst for the past two years by Nikkei Veritas. Uomoto said Monday by phone that the drop in oil prices makes tapering by the BOJ more unlikely, prompting him to change the weightings for his three credit scenarios for Japan as a result.

Uomoto’s most grim scenario for Japan is his least probable among three mid-term views through 2017, with the two others more optimistic of Abe’s ability to raise taxes by that year. Abe’s government will probably do all it can to boost the economy before national elections in 2016, as he seeks to garner support for changing the nation’s pacifist constitution, according to Uomoto.

Government debt has tripled since June 1996 to ¥1.04 quadrillion as of September, double the size of annual economic output. The BOJ increased its bond buying program last October, pushing yields on sovereign notes as long as five years to minus levels, and average corporate yields to a record low of 0.257 percent on Jan. 20, according to Bank of America Merrill Lynch indexes.

Abe’s government has few new tools with which to support the economy, leaving it reliant on companies to raise wages, according to Uomoto. Abe’s personal commitment to revising Japan’s pacifist Constitution is crucial to understanding the direction of his economic policies, and he may delay a planned sales tax increase again if it is seen as harming his party’s chances in elections to the Upper House in 2016, Uomoto said.

The government needs a two-thirds majority in both houses of the Diet to call a referendum for changing the Constitution. Abe has termed his wish to change it his “life work” and said Dec. 24 that has been a major aim of his Liberal Democratic Party since it was formed. U.S. authorities came up with the Constitution draft after World War II.

In Uomoto’s most probable scenario that he rates at 40 percent to 50 percent, he sees Abe increasing the sales tax by 2017. Even in this scenario, the risk remains that Abe will delay the levy move before elections, possibly forcing the BOJ to expand bond purchases to hold down “bad” yield increases.

Uomoto reduced to 30 percent to 40 percent the scenario that most closely reflects the government’s targets and includes the central bank beginning steps to taper in 2016 as inflation and gross domestic product rise in the first half of that year. Uomoto rated the scenario at 40 percent to 45 percent in December.

For 2015, yield premiums will probably stay tight as the BOJ keeps its bond buying program, according to Uomoto. Risks of widening spreads will increase from 2016 and extra yields on corporate notes will probably increase regardless by 2017, he said.

Any falling borrowing costs this year may not result in more debt sales by companies, who may remain reluctant to boost capital investment for what is in part a “fake” economy supported by BOJ stimulus, according to Uomoto. A weakening yen is already reducing household purchasing power and creating deflationary pressure, he said.

The yen may decline to 160 against the dollar by 2017, according to Uomoto, if the BOJ continues the current level of asset purchases. The Japanese currency was at 118.63 per dollar as of 9:50 a.m. Tuesday in Tokyo. The central bank now buys as much as ¥12 trillion of Japanese sovereign notes a month.

An increase in the sales tax to 8 percent from 5 percent last April led to a recession in 2014. Abe delayed raising the levy to 10 percent as planned until 2017.

“This is the first time for me to seriously prepare and explain a slide on a scenario that looks at Japan moving to an explosive situation,” Uomoto said at a Nomura seminar for investors in Tokyo last Thursday.

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