Moody's Investors Service Inc. said Thursday that Prime Minister Shinzo Abe's decision to postpone a hike in the consumption tax and compile a fiscal stimulus in the autumn is "credit negative," questioning the government's ability and willingness to achieve fiscal consolidation.
The U.S. debt rating agency said the government will forgo additional revenues worth around 1 percent of the nation's gross domestic product per year by delaying the planned 2-percentage-point tax hike to October 2019 from April 2017, as announced by Abe on Wednesday.
"This will likely prevent Japan from meeting its fiscal targets, which looked optimistic even before the announcement of the delay," Moody's said, noting that the envisioned fiscal stimulus package will impose a further burden on state coffers.